Charter Bids $61.3 Billion For Time Warner Cable

Right in the range it was expected to be, at $132.50 a share.

Mike Blake / Reuters / Reuters

Charter Communications announced today that it has made a bid for Time Warner Cable. Charter's CEO, Tom Rutledge, told Bloomberg News that the bid was $83-a-share in cash and $49.50 in Charter stock. In a letter to Time Warner Cable CEO and chairman Robert Marcus, Rutledge said that his company had made offers in June and October but had only been able to meet with Time Warner last month. Rutledge said that Time Warner "came back with a verbal offer at an unrealistic price expectation." Time Warner Cable closed at $132.40 this afternoon. The stock is up almost 15% in the last six months

Rutledge said in the letter that "The information provided to date has been exclusively one-way, which further reinforces the point that there is no genuine interest from Time Warner Cable management and Board of Directors to engage on this opportunity." Charter making its price public reflects a change in strategy in its bid for Time Warner, going directly to company's shareholders in an effort to win approval for a merger.

In Charter's offer, Time Warner shareholders would still own 45% of the new company. Earlier reports said that Time Warner would "likely need to bit at least $150 a share to be considered seriously by Time Warner's Cable board."

Another report from December said that Time Warner would reject any offer below $130-per-share. Charter's latest offer, of $132.50, puts them just above the informal floor for any serious offer. Rutledge said in his letter that the merger would be "beneficial to Time Warner Cable shareholders" due to "value creation from cost reductions, faster organic growth, and leveraged and tax advantaged returns"

Time Warner has 12.2 million subscribers, making it the second largest cable company in the county, with heavy concentration in New York and Los Angeles. Charter is the fourth largest cable company, with just over 4 million subscribers. Comcast, with almost 22 million subscribers, is known to be interested in a possible Time Warner bid as well.

In a note written last month when Comcast and Charter's interest in Time Warner leaked out, BTIG analyst Rich Greenfield said that, while "Time Warner Cable is quite open to being consolidated over the coming year," it should be able to fetch at least $160-a-share.

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