Charter Communications Launches Fully Financed $61 Billion Bid for Rival Time Warner Cable

Charter Communications has offered to buy Time Warner Cable in a blockbuster deal that would combine the second and fourth largest American cable operators.

The offer consists of about $83 in cash plus $47 of Charter stock per Time Warner Cable share. Accounting for Time Warner Cable's $25 billion of net debt, the enterprise value of this arrangement works out to roughly $61 billion. Charter is the smaller company in this proposed merger, with market cap and enterprise value less than half of Time Warner Cable's.

Time Warner Cable's stock didn't move much on the news, having traded above $130 since November. Charter says the high stock price rests on leaks and rumors about Charter's interest, and that the expected buyout premium has already been priced into Time Warner Cable's stock.

In a letter addressed to Time Warner Cable CEO Robert Marcus, Charter CEO Tom Rutledge noted that the companies have talked about a combination since June without reaching any agreement. Rutledge wants to return to the negotiating table and hammer out an agreement and is "preserving all options going forward."

However, he is also prepared to take this deal structure directly to Time Warner Cable's shareholders as a hostile takeover bid, with or without having Time Warner Cable's management agree to terms.

Charter said it has secured financing for the entire proposal and wants to "finalize a deal on an extremely expedited basis," because "time is of the essence."

The article Charter Communications Launches Fully Financed $61 Billion Bid for Rival Time Warner Cable originally appeared on

Fool contributor Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story