Charter close to USD55bn TWC deal; Altice boss arrives in NYC for takeover talks

26 May 2015

Charter Communications is nearing a deal to acquire larger rival Time Warner Cable (TWC) for around USD55 billion the Financial Times reports, citing people familiar with the matter. Charter, the third largest US cable operator by subscribers, is set to combine with TWC in a stock-and-cash deal that values shares in the larger company at USD195 each. The enterprise value of the transaction will be USD78 billion, which includes approximately USD22 billion in net debt. The proposed merger reportedly also includes a USD2 billion ‘break-up fee’, which indicates that there are concerns that the deal could yet fall apart over regulatory concerns. However, it has also been noted that TWC will be liable for the penalty if it chooses to accept an offer from a rival bidder.

The deal, which follows the collapse of market leader Comcast’s proposed USD45.2 billion takeover of TWC in April, coincides with US media reports regarding strong interest in TWC from European powerhouse Altice Group. According to the Wall Street Journal, Patrick Drahi, Altice’s controlling shareholder, arrived in New York on Thursday to meet with a number of top TWC executives, including CEO Rob Marcus, to discuss a possible cash-and-stock buyout of the cableco.

Altice signalled its intention to enter the US market last week with its surprise USD9.1 billion takeover of Suddenlink, the seventh largest cable broadband operator in the US. Meanwhile, Charter also has its hands full: earlier this month the company confirmed it had remains committed to its previously agreed USD10.4 billion merger with sixth largest cableco Bright House Networks.