M&A merry-go-round back in motion; could T-Mobile jump on board?

29 Apr 2015

Time Warner Cable (TWC) is open to merger discussions with Charter Communications following the failed USD45.2 billion bid launched recently by Comcast, people familiar with the matter have informed Reuters. Friendly negotiations between the two companies would contrast sharply with Charter’s ‘hostile takeover’ bid in early 2014, which effectively drove TWC into Comcast’s arms. While Charter has yet to table a formal offer, TWC believes its smaller rival may be willing to make a bid that is more attractive than its previous takeover attempt. TWC also views Charter’s stock as a more valuable currency than it did last year, given its trading performance since then, the source claimed; Charter’s shares are said to be up 33% in the last twelve months. TWC is also open to deals with companies other than Charter, the insider clarified.

Meanwhile, another merger permutation emerged during T-Mobile US’s Q1 earnings call, with CEO John Legere hinting that his company could look to counterbalance the threat posed by AT&T Inc and Verizon Communications, both of which combine wireless services with broadband offerings. While the Federal Communications Commission (FCC) has given cable-cable and wireless-wireless deals a frosty reception in recent years, the potential combination of wireless and cable players could circumvent regulatory scrutiny. According to CNET, Legere told investors: ‘I’ve always said it’s not a matter of if, but when. Now I’m going to add who … There is no correlation between M&A and desperation … The tangential players are touching mobile players in a way that makes a go-to-market strategy.’

Finally, in related news Reuters reports that both TWC and smaller rival Cox Communications have denied a Wall Street Journal article that suggested TWC had approached Cox to discuss a potential merger. ’It’s simply not true. We have not engaged in any discussions with Cox,’ TWC’s spokeswoman Susan Leepson told the news agency. A spokesperson for Cox clarified that the company was definitely not for sale.