By Dow Jones Business News,
February 07, 2014, 06:39:00 PM EDT
By Shalini Ramachandran, Martin Peers and Liz Hoffman
Charter Communications Inc. plans next week to nominate a full slate of candidates for Time Warner Cable Inc.'s 13-
member board, say people familiar with the situation, setting in motion one of the biggest recent hostile takeover bids.
Charter isn't likely to raise its offer for TWC at the same time as putting forward the slate, the people said,
despite expectations among some investors of such a move. Instead Charter is likely to wait a few weeks until later in
the proxy fight campaign before bumping the price, one of the people said. Meanwhile it would likely continue trying to
negotiate a deal privately.
Charter, the fourth largest cable operator by subscribers, has been attempting to bring Time Warner Cable, the
second biggest cable company, to the negotiating table for a merger deal since late last spring. It has made three
offers so far, the most recent at $132.50 a share, each rejected by TWC as being too low. Time Warner Cable has said it
wants a price of $160 a share and won't negotiate with Charter otherwise.
All 13 of Time Warner Cable's board members are up for re-election at the annual meeting this spring, presenting
Charter with a rare opportunity among recent hostile bidders, to take control of the board. Other hostile bids have been
hampered by staggered boards, in which only one-third of seats open up each year. Men's Wearhouse Inc., for example, has
said it plans to nominate two directors at Jos. A. Bank Clothiers Inc., hoping to press a $1.6 billion takeover bid. But
a win would be largely symbolic. Because Jos. A. Bank's board is staggered, Men's Wearhouse would have to win a second
vote in 2015 to take control.
A central point of Charter's proxy campaign will be that its candidates would, if elected to TWC's board, make a
priority of evaluating Charter's offer. A vote for Charter's candidates, one of the people said, would therefore be a
vote for TWC to engage with Charter. The identities of Charter's nominees couldn't be learned; the deadline for
nominations is Feb. 15.
How high Charter will raise its offer still isn't clear. Several Time Warner Cable investors say they'd like around
$145 a share. Time Warner Cable shares were up 94 cents to $136.29 in after-hours trading on Friday. At $145 a share, a
deal would be worth about $41 billion excluding debt.
Even a clean win in the proxy fight wouldn't guarantee that a deal gets done. The new board would have to
independently evaluate the offer, setting aside their allegiance to Charter. This responsibility has tripped up hostile
bidders before. Air Products & Chemicals Inc. in 2010 won three board seats at Airgas Inc., which Air Products had been
trying to buy. Once on the board, the new directors recommended against the deal.
Charter's proxy nomination may also occur without clarification of one big issue surrounding the monthslong
takeover battle: the role of Comcast Corp., the number one cable operator. Charter has been negotiating a deal with
Comcast in which Comcast would endorse Charter's bid for TWC in exchange for an agreement to buy some of TWC's systems
in the event Charter is successful in buying Time Warner Cable. The systems under discussion are some of TWC's east
coast systems, including those in the New York area.
Such a deal would be a big boost to Charter's hopes of winning control of TWC, by removing Comcast as a potential
rival bidder. But despite expectations among some TWC investors that a Comcast-Charter deal would be struck ahead of
Charter's nomination of its slate, an agreement isn't expected to be announced next week, a person familiar with the
If Comcast and Charter reach a deal, Comcast isn't expected to put money into a Charter bid upfront, or get
involved with any Charter-led proxy fight.
Dana Cimilluca contributed to this article.
Write to Shalini Ramachandran at email@example.com, Martin Peers at firstname.lastname@example.org and Liz Hoffman at
Corrections & Amplifications
This article was corrected February 9, 2014 at 9:16 p.m. ET to show the proper name of Jos. A. Bank Clothiers Inc. The
original version of this article incorrectly spelled it as Clothier.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2014 Dow Jones & Company, Inc.