Time Warner Cable (TWC) shareholders should vote against Comcast’s US$45.2bn all-stock takeover, according to an SEC filing from smaller rival Charter Communications which lost out in the bidding war for the cableco.
In the document, Charter…
Time Warner Cable (TWC) shareholders should vote against Comcast’s US$45.2bn all-stock takeover, according to an SEC filing from smaller rival Charter Communications which lost out in the bidding war for the cableco.
In the document, Charter criticised TWC’s board for failing to meaningfully engage with Charter regarding a merger.
Charter had been seeking to acquire TWC for more than six months and attempted a hostile takeover via a bear hug letter, offering US$37bn. However, during this stand-off Comcast rode in as the white knight and agreed a US$45.2bn offer with TWC’s management.
However, Charter said that Comcast’s stock has fallen since then, which means TWC shareholders would only receive US$141.16 per share based on the acquirer’s closing stock price yesterday. This is less than the US$158.82 when the deal was agreed, as the merger agreement did not include a collar. The fall in price means the total deal value has fallen by US$5bn, to US$40.2bn.
Charter added that the merger of the US’ two largest cablecos carried a high regulatory risk, which could delay completion until the third quarter of 2015, and said that, in this context, a break-up fee should have been attached to the deal.
The Comcast/TWC merger faces scrutiny from the Senate Judiciary Committee next week. While the committee cannot block the merger, the hearing will mark the deal’s first regulatory examination and allow advocates and opponents of the tie-up to state their case.
Comcast needs approval from the appropriate antitrust agency and from the Federal Communications Commission (FCC) before it can close the deal.
The cable giant has already pledged to divest three million of its cable subscribers in a bid to pre-empt remedies that may be imposed by the regulators.
The Comcast/TWC deal will create a cableco with 30 million subscribers, well ahead of Cox Communications, the next largest operator, which has around six million.
