Time Warner Cable in sell-off talks with Altice, Charter

25 May 2015

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Time Warner Cable Inc. is in talks with Altice SA and Charter Communications Inc., on a potential sale, Bloomberg reported, citing people with knowledge of the matter.

The talks come just a month after Comcast Corp abandoned its $45.2-billion bid for Time Warner Cable over opposition from consumers and a possible veto from US federal regulators. (See: Comcast scraps merger agreement with Time Warner Cable)

Talks with both companies will continue through the weekend, and an agreement with either suitor could be reached as soon as next week, the report said.

Time Warner Cable has a market value of around $48 billion and the suitor may have to pay more than $54 billion the report added.

Altice, which has a market value of nearly $36 billion, is a Luxembourg-based investment vehicle founded by French cable king Patrick Drahi.

Last week Atlice announced its intention of entering the US market by offering to buy a controlling 70-per cent stake in Suddenlink Communications - the seventh-largest US cable company, in a deal valued at $9.1 billion.

Reuters yesterday reported that Atlice, which has spent $40 billion on acquisitions in the past 18 months, was in talks with banks including JPMorgan Chase & Co, Nomura Co Ltd, BNP Paribas SA, Societe Generale, Barclays Plc and Royal Bank of Canada about a financing package to fund the potential Time Warner Cable deal.

Altice has a presence in France, Israel, Belgium & Luxembourg, Portugal, French West Indies / Indian Ocean Area and Dominican Republic and Switzerland. It provides pay television, broadband Internet and fixed line telephony and, in certain countries, mobile telephony services to residential customers and corporate customers.

John Malone, known as ''The King of Cable'', built a small Denver cable company into the into the largest cable provider in the 1980s. Commentators say Malone is looking to emerge as the king of consolidation in the same industry once again.

Malone, 72, wants cable companies to grow larger to allow them to take on content owners such as Walt Disney, Twenty-First Century Fox Inc and others, who are increasingly squeezing their cable and satellite rivals for higher fees at the expense of their margins.

Analysts this time expect Charter to make an opening bid that could be lower than around the $140 to $145 per TWC share that the market expects. Comcast had in mid-February offered to pay Time Warner Cable $158.82 per share, a premium of around 7 per cent to Time Warner Cables' 12 February closing price of $135.31.

With more than 15 million customers, Time Warner Cable offers data, video, and voice services to businesses of all sizes, cell tower backhaul services to wireless carriers and, through its NaviSite subsidiary, enterprise-class hosting, managed application, messaging and cloud services.

Time Warner Cable owns cable systems in New York City, Southern California, Texas, the Carolinas, Ohio, and Wisconsin.

It posted net income of $2 billion last year on revenues of $22.8 billion.

Stamford, Connecticut-based Charter offers cable video programming services, including basic and digital video, premium channels, on-demand, pay-per-view, high definition television, and digital video recorder services.

Charter  has 4.2 million residential video customers; around 4.8 million residential Internet customers, approximately 2.4 million residential voice service customers, and around 619,000 small- and medium-sized commercial customers.

It has a market cap of $19.6 billion and posted a net loss of loss of $169 million last year on revenues of $9.1 billion.

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