Time Warner Cable Shoots Down Charter Communication's Acquisition Bid
January 13, 2014 9:26 PM
It was valued at more than $61 billion USD
Charter Communications Inc. is trying to lure Time Warner Cable into
an acquisition deal
, but Time Warner says Charter has been making low-ball offers.
Charter reportedly offered Time Warner $132.50 per share for an acquisition of the company. The offer consists of $83 cash per share and about $49.50 in stock. Including debt, the deal is worth more than $61 billion ($37.3 billion excluding debt).
However, Time Warner called it a low-ball offer, saying it would be open to a deal of about $160 per share ($100 in cash and $60 in Charter common stock).
“Here’s what happened: We didn’t put our house up for sale, and we got a knock on the door and someone made a low-ball offer,” said Rob Marcus, Time Warner CEO. “They want a premium asset at a bargain-basement price, and that’s just not going to happen.”
Charter made other bids throughout last year, valuing Time Warner at $114 per share in June and $127 per share in October. They were all rejected by Time Warner.
[SOURCE: NY Daily News]
There are a couple of reasons why Charter would want to acquire Time Warner. For starters, the merger would help Charter in future negotiations with content providers. Billionaire John Malone is looking to make a provider of TV, Internet and phone service for about 20 million users in 38 U.S. states, and merging with Time Warner would make the new company the third-largest pay-TV operator by customers. This would give it some leverage against content providers, which continue to raise prices annually.
Aside from that, Charter can use its net operating losses as a way of helping out with future taxes.
On Time Warner's side of things, Charter says it can help the company build up better customer satisfaction, as Time Warner has the second-lowest score among all companies ranked in the American Customer Satisfaction Index for 2013. Time Warner also lost 215,000 video subscribers in Q4 after a 304,000 loss in the previous quarter.
But it looks like the two will have to continue battling over price until a compromise is reached (or not).
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