America’s largest cableco Comcast is reported to have mandated JP Morgan to weigh up a possible bid for Time Warner Cable (TWC).
Comcast does not plan on making the first offer for TWC but could jump in later if smaller rival Charter Communications is…
America’s largest cableco Comcast is reported to have mandated JP Morgan to weigh up a possible bid for Time Warner Cable (TWC).
Comcast does not plan on making the first offer for TWC but could jump in later if smaller rival Charter Communications is nearing a deal, people familiar with the matter told Reuters.
For months, TWC has been the subject of M&A speculation and has been pursued by Charter for most of the year. However, the target’s board reportedly favours a Comcast offer.
TWC feels Comcast is a better merger partner as it can make an all-cash offer and has a more complimentary footprint, the report said. Morgan Stanley is said to be advising TWC.
A Charter takeover would likely create a new entity with a large debt load. Charter is reportedly trying to secure a US$25bn financing package to fund an offer.
In its Q3 results, Charter reported net debt of US$14bn – the same as its market capitalisation – while TWC’s stood at US$24bn. Should Charter succeed in raising the new US$25bn financing package for a takeover, the newly-merged cableco could hold US$63bn in net debt.
A further possibility is that Comcast and Charter could team up for a bid.
As TWC is the US’ second largest cableco, a sole Comcast takeover may catch the eye of regulators. Charter is unlikely to face significant regulatory hurdles to complete a deal but has to raise a substantial amount of cash for a tie-up.
The two prospective bidders were reported to have held preliminary talks.
TWC has said it is open to a takeover offer if it is the right price. The company would reportedly accept a US$150 to US$160 per share offer. TWC stock is currently trading at US$131.
