John Malone snaps up Time Warner Cable
John Malone's Charter Communications has agreed to buy Time Warner Cable for over $55bn (€50.4bn) in cash and stock, scooping up the cable provider after getting last-minute competition from French billionaire Patrick Drahi.
Charter will pay $195.71 a share - 14pc above Time Warner Cable's May 22 closing price - with options of $100 and $115 in cash and the remainder in its own stock, according to a statement issued yesterday.
Bright House Networks, a smaller cable company that Charter has previously agreed to buy, will also be merged into the combined entity.
Charter is the fourth-biggest US cable company after a planned tie-up between Comcast and Time Warner Cable fell apart under regulatory scrutiny in April.
Charter also saw off interest from French group Altice.
"The idea that Time Warner Cable and Charter are merging isn't a surprise, but the price raises some eyebrows," Craig Moffett, an analyst at MoffettNathanson in New York, said May 24 after Bloomberg News reported a deal was near. "Altice undoubtedly contributed to Charter having to pay such a steep price to close the deal."
Including debt, the transaction values Time Warner Cable at $78.7bn. Charter's largest shareholder is billionaire John Malone, an Irish-American investor whose Liberty Global cable business owns UPC here and who in the past three years has snapped up a clutch of Irish hotels and properties including Castlemartin, a 750-acre Kildare estate formerly owned by Tony O'Reilly, Humewood Castle in Co Wicklow and hotels including the Westin and InterContinental five star hotels in Dublin.
Buying Time Warner will almost quadruple Charter's US cable subscribers, gaining 12 million customers in cities including New York, Los Angeles and Dallas.
Time Warner Cable shareholders who choose to receive $100 in cash will get 0.5409 Charter share.
They can also elect to receive $115 in cash plus 0.4562 Charter share, the companies said.
The transaction, which requires regulatory approval, is expected to be completed by the end of 2015.
Dealmaking has been heating up in an industry that faces waning demand for traditional pay-TV packages and competition from Netflix, Amazon and other online services.
Although many analysts predicted a tie-up between Charter and Time Warner Cable, French rival Patrick Drahi's Altice Group made a surprise foray into the US on May 20 with the announcement of plans to buy a smaller provider, Suddenlink Communications.