US cableco Charter Communications has said the management of acquisition target Time Warner Cable (TWC) failed its shareholders by not engaging with its attempts to take over the company.
In an interview with CNBC, Charter’s CEO Tom Rutledge said its…
US cableco Charter Communications has said the management of acquisition target Time Warner Cable (TWC) failed its shareholders by not engaging with its attempts to take over the company.
In an interview with CNBC, Charter’s CEO Tom Rutledge said its US$132.50 per share proposal was a rich and fair offer and called TWC’s demand for US$160 per share a “non serious response”.
Rutledge has said that Charter decided to make its latest offer public to encourage TWC shareholders to get in touch with the target’s management and lobby them to come to the negotiating table. He pointed out that when Charter was first interested in TWC last June, the target’s shares was trading at US$96 and said that therefore its US$132.50 per share offer represented a sizeable premium.
Meanwhile TWC has laid out why it feels Charter’s offer is “grossly inadequate” and explained why its management has not been more receptive to Charter’s advances. “Charter is not prepared to pay for a one-of-a-kind asset and instead chose to go public with another low-ball proposal in an attempt to steal the company,” TWC said in a presentation.
TWC added that the 7.2x EBITDA multiple that Charter’s offer represented was significantly lower than other transactions in the sector, where multiples are never lower than 8x based on recent history.
The war of words between the rival cablecos is becoming increasingly acrimonious and any deal seems a way off. In a memo, Wells Fargo analyst Marci Ryvicker said she felt that “the two sides are still fairly far apart on a potential transaction”.
Ryvicker does not think that Charter will end up acquiring all of TWC: “We … ultimately believe that TWC will be sold in pieces and view the stock as remaining closer to the floor price (Charter’s US$132.50 offer) than its ceiling (TWC’s US$160 request) until the offer is raised (which was noted as a possibility), or another bidder comes in.”
TWC’s stock opened at US$135.90 today after rallying yesterday, while Charter’s stock has risen just over 1% since the start of the week.
