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TWC Rebuffs Charter's Latest Offer

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Light Reading
1/13/2014
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NEW YORK--(BUSINESS WIRE)-- Time Warner Cable Inc. said today that its Board of Directors has unanimously rejected a third grossly inadequate proposal from Charter Communications rally in a letter received today from Charter as being in the “low $130s.” Based on an interview with Charter CEO, Tom Rutledge , Bloomberg reported that the offer was for $132.50, consisting of $83.00 in cash and $49.50 in Charter stock. Charter had previously offered cash and stock nominally valued at approximately $114 in June and approximately $127 in October.

Rob Marcus , Time Warner Cable’s Chairman and Chief Executive Officer, said: “Charter’s latest proposal is a non-starter. First and foremost, it substantially undervalues TWC and would represent an EBITDA multiple of approximately 7X, well below past transactions in the cable sector. Indeed, our high-quality assets, unique scale, synergy potential, growth opportunities and strong financial position should command a premium valuation compared to precedent transactions, not the discount offered by Charter. Not only is the nominal valuation far too low, but because a significant portion of the purchase price would be in Charter stock, the actual value delivered to TWC shareholders could be substantially lower given the valuation, operational, and significant balance sheet risks embedded in Charter’s stock.”

“TWC is a one-of-a-kind company. We are the only large pure-play, non-family controlled cable operator in the United States, with 15 million customers in some of the country’s best markets. We have an incredibly robust network, having invested almost $15 billion in CapEx since our separation from Time Warner Inc. in 2009. We are continually enhancing the capacity of that network to support future growth and expansion of our product offerings, adding significantly faster data speeds and advanced multi-platform video offerings. In short, we’re in a great business and confident we have the right assets, the right people and the right strategic plan to deliver great experiences to our customers and create significant value for our shareholders. Our shareholders deserve to realize that value and benefit from the unique position of the company.”

N.J. Nicholas, Jr. , the independent lead director of the TWC Board, added, “The Board takes very seriously its obligation to maximize shareholder value and, on that basis, we gave Charter our bottom line. The Charter proposal doesn't come close to providing our shareholders with the kind of value and protections they should expect in a transaction. In fact, it would transfer significant value from our shareholders to Charter shareholders, while dramatically increasing the risk profile for our shareholders. As such, it is wholly inconsistent with the interests of our investors and our responsibilities as a Board.”

Time Warner Cable Inc. (NYSE: TWC)

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