US cableco Charter Communications has reportedly made contact with market leader Comcast this week to discuss joining forces to take over their rival Time Warner Cable (TWC).
The news follows Charter’s announcement on Monday that TWC had knocked back…
US cableco Charter Communications has reportedly made contact with market leader Comcast this week to discuss joining forces to take over their rival Time Warner Cable (TWC).
The news follows Charter’s announcement on Monday that TWC had knocked back its US$62.3bn takeover offer, including debt.
Charter had offered US$132.50 per share, but TWC’s management replied by saying they wanted US$160 – equal to an enterprise value of US$70bn.
Charter is said to have approached Comcast yesterday to discuss breaking up TWC and what form that might take, people familiar with the matter told Reuters.
One potential scenario is that Charter buys all of TWC and then sells a number of the target’s geographic markets on to Comcast, the report said.
In December Comcast was reported to have mandated JP Morgan to weigh up options for a possible TWC bid.
As the largest cableco in the US by some distance, lawyers have previously told TelecomFinance that Comcast is likely to face regulatory difficulty if it looks to buy TWC. However if it were to team with a smaller player like Charter, the company may be allowed to acquire a certain amount of TWC’s assets.
Comcast is the largest cable operator in the US with about 22 million subscribers while TWC is second with circa 12 million, followed by Cox Communications and Charter, which both have less than 5 million.
Morgan Stanley, Allen & Company and Citigroup are serving as financial advisers to Time Warner Cable while Goldman Sachs and LionTree Advisors are serving as lead financial advisers to Charter. Guggenheim Securities, BofA Merrill Lynch, Credit Suisse, and Deutsche Bank are also advising Charter.
