Is Comcast Pursuing Time Warner Cable? - Analyst Blog

By Zacks Equity Research,

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Yesterday, Reuters reported that Comcast Corp. ( CMCSA ) is considering all strategic options to acquire full or partial control of Time Warner Cable Inc. ( TWC ). Recently, the company selected Barclays Plc. as an advisor to evaluate the deal.

Earlier, Comcast had hired JPMorgan Chase & Co. as its adviser. Both JPMorgan and Barclays will now evaluate the Time Warner Cable acquisition deal.

Last week, Charter Communications Inc. ( CHTR ) offered a fresh bid to acquire Time Warner Cable. The company offered $132.50 per share of Time Warner Cable, including $83 in cash and $49.50 in Charter stock.

The total size of the deal is approximately $62.35 billion. Excluding debt, the deal size is around $37.3 billion. The existing Time Warner Cable stockholders will gain a 45% control of the merged entity.

However, the board of directors of Time Warner Cable unanimously rejected the offer from Charter on grounds of inadequacy. This is the third rejection in the last one year.

Time Warner Cable intends to thoroughly evaluate whether the deal will add sufficient value to its investors before finalizing. Several industry researchers have estimated that the offer size may go up to $160-$162 per share.

The news of a proposed merger between Charter Communications and Time Warner Cable first surfaced after Liberty Media Corp. ( LMCA ) acquired a 27.3% stake in the former.

Liberty Media is aggressively pursuing the idea of Charter Communications acquiring a major cable TV operator in the U.S., such as Time Warner Cable.

We believe Comcast may offer higher bids for Time Warner Cable, however, the deal may face severe regulatory hurdles from antitrust authorities.

Comcast and Time Warner Cable are the first and second largest cable TV operators in the U.S., respectively. A merger between the two entities may create monopolistic power in the industry. Currently, both Comcast and Time Warner Cable have a Zacks Rank #3 (Hold).

CHARTER COMM-A (CHTR): Free Stock Analysis Report

COMCAST CORP A (CMCSA): Free Stock Analysis Report

LIBERTY MEDIA-A (LMCA): Free Stock Analysis Report

TIME WARNER CAB (TWC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: CHTR , CMCSA , LMCA , TWC

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