Charter takes rejected Time Warner Cable bid to investors

Mon Jan 13, 2014 8:56pm EST
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By Liana B. Baker and Nicola Leske

NEW YORK (Reuters) - Charter Communications Inc on Monday formally offered to acquire larger rival Time Warner Cable for $37.3 billion, sparking what is likely to be a contentious battle for control of the No. 2 U.S. cable operator.

Charter, the No. 4 cable operator, proposed paying $132.50 per share - barely higher than where Time Warner Cable shares closed on Monday - consisting of around $83 per share in cash and its own stock.

Monday's offer is the boldest sign yet that cable billionaire and dealmaker John Malone thinks that new managers could do a better job running the company, which has fallen behind by not investing enough in taking on competitors and shifting to digital technology. Malone's Liberty Media Corp owns 27 percent of Charter.

Including debt, the deal is worth $62.35 billion. Time Warner Cable shareholders would get 45 percent ownership in the combined company.

The letter was Charter's third attempt to buy the company, according to its executives, and within a few hours of receiving it, Time Warner Cable's board rejected the offer as "grossly inadequate."

"In essence, these guys are just trying to get a premium asset at a bargain basement price," said Time Warner Cable Chief Executive Officer Rob Marcus in an interview. "This makes the job of fending it off rather straightforward. Our shareholders will see it as what it is, an attempt to steal the company."

Marcus, who took over the top post on January 1 after eight years, said the board told Charter it was open to a price of $160 per share, consisting of $100 in cash and $60 per share of Charter's stock.

Charter now plans to take the deal directly to Time Warner Cable shareholders, said Charter's CEO Tom Rutledge in an interview.   Continued...

A cable truck returns to a Time Warner Cable office in San Diego, California December 11, 2013. REUTERS/Mike Blake