John Malone-controlled cableco Charter Communications is reported to be arranging a US$25bn debt package for a takeover of larger rival Time Warner Cable (TWC).
This would allow Charter to make an offer which would include close to a US$90 per share…
John Malone-controlled cableco Charter Communications is reported to be arranging a US$25bn debt package for a takeover of larger rival Time Warner Cable (TWC).
This would allow Charter to make an offer which would include close to a US$90 per share cash component, people familiar with the matter told The Wall Street Journal. The rest of the consideration could be made up of Charter stock, but the size of any offer is unclear.
Since Charter’s interest in TWC became apparent in June, the target’s share price has risen more than 45% to US$136.8. It has a market capitalisation of US$38.5bn.
Rival cablecos Comcast and Cox Communications are also said to be interested in TWC, and reports have suggested TWC may be more comfortable with offers from these companies. Its management is reportedly concerned about the scale of debt a Charter/TWC tie-up would hold.
In its Q3 results, Charter reported net debt of US$14bn – the same as its market capitalisation – while TWC disclosed a US$24bn pile. Should Charter succeed in raising the new US$25bn financing package for a takeover, the newly-merged cableco would hold US$63bn in net debt.
Last week it was reported that Charter could team up with Comcast for a bid to limit the amount of debt it would need to take on. That scenario may also suit Comcast, which could run into regulatory difficulties if it tried to acquire TWC alone.
Charter’s stock has also risen over recent months. Since cable veteran John Malone’s Liberty Media acquired a controlling stake in Charter back in March, the operator’s share price has increased by almost 50%.
