Time Warner splutters as Charter offers $61 billion for company
Charter Communications has offered to buy Time Warner Cable for about $61 billion. The stunning bid would merge the No. 4 and No. 2 cable companies in the United States and "shake up the troubled cable television industry." said USA Today.
Time Warner: Now a bidding war?
Time Warner Cable's board of directors spluttered and quickly rejected the offer, calling it "a third grossly inadequate proposal."
Charter's bid of $132.50 a share for the much larger Time Warner Cable represents one of the biggest takeover offers on Wall Street since the financial crisis. It would include $37 billion in cash and stock and the rest in assuming TWC's debt.
A bidding war for TWC could now start , with other cable operators such as Comcast and Cox Communications joining in, said the paper.
"Charter's latest proposal is a non-starter," said TWC's CEO Robert Marcus in a statement .
"Not only is the nominal valuation far too low, but because a significant portion of the purchase price would be in Charter stock, the actual value delivered to TWC shareholders could be substantially lower given the valuation, operational and significant balance sheet risks embedded in Charter's stock."
But Marcus said his company was willing to accept a price of $160 per TWC share, consisting of $100 in cash and $60 per share of Charter common stock.
Charter had previously offered cash and stock valued at about $114 a share in June and about $127 in October, TWC noted in its statement. TWC rejected those offers as it continued to weigh other options, including talks with other cable companies.
"Time Warner Cable quickly rejected our proposals in June and October, and refused to engage until we met in December. I communicated a willingness to submit a revised proposal in the low $130s, including a cash component of approximately $83," wrote Charter CEO Tom Rutledge in a letter to Marcus Monday.
TWC shares have risen nearly 15% in the last six months. Citing the stock's rise and TWC's reluctance to engage more fully in talks for a merger, Rutledge is revealing his latest offer publicly "to bring the matter to shareholders directly," Charter said.
With greater competition from online streaming video operators, pay-TV providers are struggling to hold on to subscribers. Content creators are also demanding more for licensing their shows.