Charter Communications is near to agreeing a $55.1 billion acquisition of rival U.S. cableco Time Warner Cable (TWC), a deal that would create a stronger competitor to market leader Comcast, but one that may also have to see off a competing bid from Altice.
Sources cited by Bloomberg on Monday claimed that Charter will pay $195 per share for TWC, consisting of $100 in cash and the remainder in Charter stock.
The transaction will include a $2 billion breakup fee in anticipation of a possible rival offer from Luxembourg-based cable group Altice, as well as antitrust issues, the sources said. To help fund the acquisition, Charter’s biggest single shareholder, John Malone’s Liberty Broadband, has agreed to buy $5 billion worth of Charter stock at the current price.
A deal could be announced on Tuesday, according to Bloomberg.
The merged entity would boast a combined TV customer base of 14.97 million, compared to Comcast’s 22.38 million. In terms of Internet customers, Charter-TWC would have 16.8 8 million to Comcast’s 22.37 million.
This stands to be the second time that Charter has made a move for Time Warner Cable. In February 2014, it made a $132.50 per-share offer that was rejected by TWC, which subsequently accepted a $158.80 offer from Comcast. However, the merger was called off in April this year in the face of stiff regulatory opposition.
At $55.1 billion, Charter’s offer for TWC is considerably higher in value than Comcast’s $45.2 billion TWC deal.
One contributing factor, according to Bloomberg’s sources, is that Altice founder Patrick Drahi has also shown interest in TWC.
Last week, Altice announced its impending entry into the U.S. cable market by agreeing to acquire regional service provider Suddenlink in a deal worth $9.1 billion.
While in the country, it is alleged that Drahi also held talks with TWC chief executive Rob Marcus.
"Altice undoubtedly contributed to Charter having to pay such a steep price to close the deal," said MoffettNathanson analyst Craig Moffett, in the Bloomberg report.
