It appears to be open season for bidding on Charter Communications, if the latest news reports are true.
In a story first reported by CNBC Wednesday morning, Altice is prepping what could be as much as a $200 billion offer for Charter Communications Inc. , the second-largest US cable company. The French telecom giant and its US subsidiary, Altice USA, are working on putting the offer together but have not yet brought the proposal to Charter or its advisors, according to the reports.
Such a move would make sense for Altice, which has made no secret of the fact that it would like to expand its US presence beyond the former Cablevision Systems and Suddenlink Communications properties that it bought over the last two years. With Altice USA now the fourth-biggest MSO in the nation, a merger with Charter would put it pretty much on an equal footing with No. 1 Comcast Corp. (Nasdaq: CMCSA, CMCSK).
The reports suggest that Altice executives are weighing the move now because they see Charter in play following recent overtures by Sprint Corp. (NYSE: S) and its Japanese parent, SoftBank Corp. , as well as Verizon Communications Inc. (NYSE: VZ) before them. Charter has snubbed all such overtures so far, preferring to remain independent after bulking up through its own recent acquisitions of Time Warner Cable and Bright House Networks. (See Charter Rebuffs Sprint, Still a SoftBank Target?)
But, like Verizon, Sprint and SoftBank, Alttice would face major hurdles in bringing Charter to the altar. Chief among them would be structuring an offer that would include plenty of cash and favorable tax treatment for Charter's biggest and most influential shareholder, Liberty Media Corp. (NYSE: LMC). Liberty Media Chairman John Malone and top Charter management executives would likely reject any kind of debt-laden or stock-intensive deal that Altice and its advisors might put together.
Then there are the regulatory hurdles that would have to be overcome, especially for an international bidder. But Altice was able to overcome those when it entered the US market two years ago.
Charter, Altice and Liberty Media are all declining to comment on the report. So much for the summer doldrums.
— Alan Breznick, Cable/Video Practice Leader, Light Reading