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Charter Communications and Time Warner clash over $61.3 bn acquisition bid

MUMBAI: Two large conglomerates Charter Communications and Time Warner Cable are engaged in a verbal duel over the acquisition bid presented by Charter.

The debate started when Time Warner Cable CEO Rob Marcus said that he was willing to sell the cable company, but Charter’s offer of $132.50 a share, valued at $61.3 billion including debt, is ‘a non-starter’ that substantially undervalues Time Warner Cable.

Marcus added that Time Warner deserves much more because it’s the only large pure-play, non-family controlled cable operator in US, with 15 million customers. He said that the board is open to a transaction with Charter at a price of $160 per share with at least $100 in cash.

Charter’s interest in the cable company is no surprise but the terms of the formal proposal suggest that it may turn out to be a lengthy, public battle. Charter says that it will campaign for Time Warner Cable shareholders to support its $132.50 a share offer which Time Warner executives have already rejected.

Charter now plans to take the deal directly to Time Warner Cable shareholders. Charter CEO Tom Rutledge, who has spent 23 years at Time Warner Cable in his career, stated that he could run the company better. He added that Liberty Media, which owns 27 per cent of Charter and is headed by cable pioneer John Malone, has indicated a willingness to put up additional capital for Time Warner Cable.

Charter’s executives said that Warner is too cheap to upgrade its Internet and video operations to better serve its subscribers. Their effort here is to state that it can better run the company and that its bid rejected by Time Warner Cable is fair. Under the terms of the deal, Charter is offering about $37 billion in cash and would assume roughly $24 billion in debt.

Executives from the company made these comments on a conference call a day after it launched a bid for Time Warner Cable. Charter has been trying for six months to strike a deal to buy Time Warner Cable and sway its shareholders after three of its offers have been rejected.

Charter first approached Time Warner Cable about a deal in June and made two offers prior to the current one that it went public with Monday. Time Warner Cable has more than 15 million video and Internet customers including several million in New York City and Southern California. The much smaller Charter has almost half as many video and Internet subscribers.

In response to Charter’s comment, Time Warner Cable released a statement saying, “We are confident in our standalone plan and we are not going to let Charter steal the company.”

Charter’s lead financial advisers included Goldman Sachs and Aryeh Bourkoff’s LionTree Advisors with help from Guggenheim Securities, BofA Merrill Lynch, Credit Suisse and Deutsche Bank Securities. Its legal matters were handled by Wachtell, Lipton, Rosen & Katz and Kirkland & Ellis.

The takeover would be the biggest in the sector since 2002, when Comcast acquired AT&T’s cable-internet division in a $30 billion deal.