Charter Communications, Inc. (CHTR) Offers To Buy Time Warner Cable (TWC) For $61 Billion

Charter Communications

Charter Communications Inc (NASDAQ:CHTR) sent a letter to Time Warner Cable Inc (NYSE:TWC) requesting an immediate discussions regarding its merger proposal. The fourth largest U.S. cable service provider offered to acquire its larger peer for approximately $132.50 per share or more than $61 billion including debt.

In an interview, Tom Rutledge, CEO of Charter Communications Inc (NASDAQ:CHTR) said proposed acquisition price include a cash of $83 per share and $49.50 stock of the company’s stock. Excluding the debt of Time Warner Cable Inc (NYSE:TWC), Charter Communications would pay around $37.3 billion.

Data compiled by Bloomberg showed that the proposal of Charter Communications Inc (NASDAQ:CHTR) to acquire Time Warner Cable Unc (NYSE:TWC) is the third largest deal for any global company since 2009. Time Warner Cable is the second biggest cable service provider in the United States.

 Charter explains benefits of the proposed merger

In a letter addressed to Rob Marcus, CEO of Time Warmer Cable Inc (NYSE:TWC), Charter Communications Inc (NASDAQ:CHTR) explained that its offer is beneficial to shareholders. The smaller cable service provider wants to acquire its larger peer to expand its business by offering TV, internet and phone services for approximately 20 million customers across the 38 states in the country.

Time Warner Cable Inc (NYSE:TWC) rejected the previous offer of Charter Communications Inc (NASDAQ:CHTR) because the acquisition price did not represent a premium. John Malone, CEO and chairman of Liberty Media Corp (NASDAQ:LMCA), the largest shareholder of Charter Communications initiated the takeover bid. He said,  “Our objective was to talk to management and try to get them engaged. They have not, so we’re going to make our case to shareholders about why this deal is good for them and hope they ask management and the board to watch out for the interests of shareholders.”

According to Rutledge, they haven’t received any serious response from the management of Time Warner Cable Inc (NYSE:TWC) regarding their proposal.

Last November, it had been reported that Charter Communications Inc (NASDAQ:CHTR) was seeking $25 billion in debt financing to fund its takeover bid for Time Warner Inc (NYSE:TWC).

Time Warner requested higher offer in December meeting

Last December, Rutledge together with CFO, Chris Winfrey discussed the details of the offer of Charter Communications including the structure, financing, tax and cash flow implications  to Time Warner’s Marcus and CFO Artie Minson. Back then, Charter Communications indicated its willingness to offer a price below $130s including an $83 per share cash component.

However, Marcus and Minson showed that they are interested in the proposed merger because they requested a superior bid with a higher cash component. Charter Communications said the response of Time Warner Cable Inc (NYSE:TWC) to engage in a merger agreement was not genuine. Rutledge said, “They knew the price they were offering was designed to not appeal.”

In its letter, Charter Communications Inc (NASDAQ:CHTR) said it is preserving all option tp move forward. A person familiar with the company’s plan previously stated that it would nominate a list of directors to the board of Time Warner Cable Inc (NYSE:TWC).Rutledge said he prefers to complete a friendly cash and stock merger agreement between Charter Communications and Time Warner cable as soon as possible.