Fri, Aug. 28, 8:24 PM
- The telecom/media sectors have been ripe for merger activity and speculation with more than 360 telecom deals announced this year, but cheaper targets are getting harder to come by -- that, according to two of the big spenders.
- Speaking at CTAM in Amsterdam, Charter Communications (NASDAQ:CHTR) Chairman Eric Zinterhofer said “Asset valuations are high -- we’re not going to pay 9, 10 or 11 times” earnings multiples. Charter's in the middle of assembling funding for its $78.7B buyout of Time Warner Cable (NYSE:TWC) and Bright House Networks. Interest rates will have to rise before the valuations come down, he says.
- France's Altice (OTCPK:ATCEY), briefly considered a bidder for TWC and harboring ambitions to expand in America, will focus on digesting existing deals, like its purchase of Suddenlink Communications, and including integrating French wireless firm SFR with cableco Numericable.
- “There are no obvious targets for us, not KPN, not anyone else -- it all depends on price,” says Altice CEO Dexter Goei. “There’s a scarcity of assets that are cheap, but if a stock is too expensive today, maybe we’ll look again in two years when China blows up or something else happens. We’re always opportunistic.”
- Previous coverage of Charter/TWC/Bright House
Fri, Aug. 28, 12:50 PM
- Barclays' Kannan Venkateshwar has raised the firm's price targets on merger partners Charter Communications (CHTR -0.8%) and Time Warner Cable (TWC -0.7%), noting growing operating leverage and what looks like a conservative take on synergies.
- The price target on Charter was raised to $204, from $157. Based on that, Venkateshwar raised the target on Time Warner Cable to $206, from $166.
- Time Warner Cable is currently trading at $186.63, implying more than 10% upside, while Charter's trading at $180.28, implying more than 13% upside.
- Charter's seeing operating leverage for the first time after years of investment, Venkateshwar says, boosting confidence that it could generate earnings growth after engulfing TWC and Bright House Networks.
- Venkateshwar estimates synergies close to a $1B, higher than Charter's guidance to $800M, and believes the company may be able to boost better margin expansion -- closer to that of Comcast.
Mon, Jul. 20, 4:09 PM
- Charter Communications (CHTR +0.9%) is moving forward steadily on its plan to acquire Time Warner Cable (TWC +1%), hiring D.C. lobbyists to help seal the deal in a regulatory environment where nothing's a sure thing.
- The company has signed up a handful of telecom specialists to usher the deal through Washington, though a major hurdle was surely cleared when Netflix wrote the FCC in support of the takeover.
- Meanwhile, on the funding side, Charter is raising eyebrows as it's set to become one of the biggest borrowers not only of investment-grade debt but of junk as well, as it tries to set up a deal that values TWC at $78.7B including debt.
- Charter's already been the third-most active borrower this year, just behind JPMorgan Chase and Actavis; the buyout could leave Charter with up to $66B in debt, and bonds sold by Charter and TWC are losing many times the broader market in 2015.
- A debt-stoked buying spree had bankrupted Charter in 2009. “Charter is walking on a razor’s edge,” says CreditSights' Chris Ucko. “This is a very unique capital structure, especially given Charter’s size, and very appealing for the issuer. For investors caution is understandable.”
- Previously: Charter, TWC up after interconnection deal wins Netflix support (Jul. 15 2015)
Wed, Jul. 15, 1:07 PM
- Charter Communications (CHTR +2%) and Time Warner Cable (TWC +1.3%) are on the move this afternoon as Charter draws an important ally in its TWC takeover: Netflix (NFLX -2.2%) is endorsing the deal, telling the FCC of "substantial public interest benefit."
- Charter is offering free interconnection with content/longhaul providers until December 2018, and that's enough to win Netflix's support for the TWC deal -- if Charter keeps that promise.
- "Charter's new peering policy is a welcome and significant departure from the efforts of some ISPs to collect access tolls on the Internet," Netflix's letter reads.
- Netflix's opposition to Comcast's deal for TWC is believed to have held a lot of weight in the breakup of that takeover.
Thu, Jul. 9, 9:00 AM
- Charter Communications (NASDAQ:CHTR) is pursuing a six-part benchmark bond deal for pricing today, in seeking funding for a $56B acquisition of Time Warner Cable (NYSE:TWC).
- The investment-grade bond is part of a package that's likely to take shape over the coming week with high-yield bonds as well as bank debt, in a funding package that could come to $31B.
- Goldman Sachs is global coordinator for the high-grade deal, with BofA Merrill Lynch and Credit Suisse as active books.
- Time Warner Cable is +0.9% premarket.
- Previously: Reuters: Charter may seek multibillion-dollar bond tomorrow for TWC deal (Jul. 08 2015)
- Previously: FCC sets team to review Charter-TWC merger (Jul. 08 2015)
Wed, Jul. 8, 5:06 PM
- Charter Communications (CHTR -1.5%) may be hitting the high-grade debt market tomorrow with a multibillion-dollar M&A bond for its Time Warner Cable (NYSE:TWC) acquisition, Reuters reports.
- That's still dependent on conditions -- which have been shaky recently, with Greece and China weighing heavily on investors' minds.
- "The investment-grade (portion) is expected tomorrow, the high-yield maybe next week," said one of Reuters' buy-side sources of a funding plan that likely comes to more than $30B.
- It will come down to a Thursday morning decision based on the state of world markets.
Wed, Jul. 8, 4:14 PM
- Progress at the FCC -- though maybe not as quick as investors like -- as the agency's chairman, Tom Wheeler, has picked the team to review the Charter-Time Warner Cable merger deal.
- The agency's general counsel, Jonathan Sallet, will head the team, which also includes the same senior economist (William Rogerson) who worked on the Comcast-TWC deal and the AT&T-DirecTV merger. Former Justice Dept. antitrust attorney Owen Kendler will head the transaction review team.
- Today: CHTR -1.5%; TWC -1.4%.
Thu, Jun. 25, 1:06 PM
- With regulators including FCC Chairman Tom Wheeler saying that Charter Communications (NASDAQ:CHTR) needs to demonstrate value to consumers in its plan to acquire Time Warner Cable (NYSE:TWC) and Bright House, the company says it'll play nice with net neutrality rules and bring better, cheaper service to a largely expanded footprint.
- Charter says it will provide faster -- and uncapped -- data service for less money than a competitor could. The combined company would have fewer Internet customers than Comcast has now, and fewer cable customers than the combo of AT&T/DirecTV.
- And despite a lawsuit from big cablecos challenging the FCC's new broadband regulatory regime, Charter says it will continue policies of not blocking or throttling traffic or enabling paid prioritization.
- The company also says it will submit interconnection disputes to the FCC, in accordance with the new rules.
- Previously: Bloomberg: Charter seeking $13.8B in debt for TWC purchase (Jun. 18 2015)
Thu, Jun. 18, 10:19 AM
- Charter Communications (CHTR +0.4%) is looking for $13.8B in bridge loans to finance a $55B purchase of Time Warner Cable (TWC +0.2%), Bloomberg reports.
- The package would include a $6B secured loan and two unsecured pieces coming to $7.8B.
- It suggests a progressing timetable for the deal, since investors need to commit by June 24 and the bridge financing would eventually surely be replaced by longer-term debt.
- Credit Suisse, Goldman Sachs, BofA, Deutsche Bank and UBS are arranging the deal.
Fri, Jun. 12, 5:19 PM
- Today in telecom consolidation speculation: While Dish Network (NASDAQ:DISH) and T-Mobile (NYSE:TMUS) have been talking about a deal with upsides for both (and shareholders have driven DISH up 2.6%, TMUS up 1.8% since word broke June 3), they aren't each other's only option.
- And much of what transpires there depends on T-Mo parent Deutsche Telekom (OTCQX:DTEGY) and what it wants to do with an asset that can command top dollar as perhaps the last attainable big U.S. cell provider.
- “They’re obviously controlled by a German company who has strategic initiatives, both in Europe and the United States, and they may not be in a position where they want to do anything," Dish chief Charlie Ergen said in a Bloomberg TV interview.
- From Dish's perspective: It doesn't need to rush, as it's making free cash flow and has time to sit on its large spectrum stockpiles yet. Ergen could look for a sale to Verizon (NYSE:VZ), or break the spectrum off into a separate company with a sale-leaseback. In any case, many deals that seemed well under way have been kiboshed by the mercurial Ergen.
- Fron T-Mobile's: Deutsche Telekom is reportedly worried about an overvalued Dish and getting too much of that stock. T-Mobile could probably command $49/share in a sale, or a 25% premium, says Gabelli's Sergey Dluzhevskiy. One company that wouldn't blink at that price would be Comcast (NASDAQ:CMCSA) in its own quad-play grab.
- Altice (OTC:ATCEY), which considered a run at Time Warner Cable (NYSE:TWC), could be a long-shot for T-Mobile, or even Charter (NASDAQ:CHTR). And with AT&T expanding in Mexico, how interesting would it be if América Móvil (NYSE:AMX) pumped up its U.S. presence with Big Magenta?
Mon, Jun. 8, 3:42 AM
- While mergers and acquisitions have accelerated sharply since the financial crisis, the government's pace for reviewing proposed deals is slowing.
- In such deal reviews concluded this year, more than 10 months elapsed, on average, between the transaction's announcement and a yes-or-no decision by the FTC or Justice Department. That's an increase from an average of seven months in recent years.
- Notables: Comcast's (NASDAQ:CMCSA) bid for Time Warner (NYSE:TWC) was pending for 14 months before it was dropped in April. Applied Materials (NASDAQ:AMAT) walked away from its deal to acquire Tokyo Electron (OTCPK:TOELY) 19 months after it was announced, while the FTC spent more than a year examining Sysco's (NYSE:SYY) planned acquisition of U.S. Foods before bringing a lawsuit against it in February.
Tue, Jun. 2, 6:46 PM
- Mogul John Malone floated an interesting idea today: Forget Sprint and T-Mobile -- the wireless industry could get its third major alternative to Verizon and AT&T (NYSE:T) with the merger of Charter Communications (CHTR -1.6%) and Time Warner Cable (TWC -0.9%).
- Malone was speaking at his various Liberty companies' annual meetings and noted that in 2012, the cable consortium SpectrumCo got an option to participate in a wireless MVNO service with Verizon (NYSE:VZ) after the wireless firm bought $3.9B in frequencies.
- Charter wasn't in SpectrumCo then, but merger partners TWC and Bright House are. “The concept that Comcast, a greatly enlarged Charter and Cox could together offer a WiFi-optimized connectivity service with a default to a Verizon MVNO is an interesting concept," Malone said.
- He thinks "there's very little dirty underwear" left to be found in a regulatory review of Charter-TWC after the past year's scrutiny.
- Also of interest regarding Charter capex and the dividend: “Everybody's going to say, ‘Oh he’s spending too much capital,’ but I think the end result with be worth it ... To a large degree we’re betting on Tom Rutledge and his team to wake up a sleepy cable company that was treading water in all honesty for a while and trying to satisfy shareholder pressures with buybacks and dividends as opposed to putting the money into having a competitive service offering.”
- Malone company shares today: LMCA -0.1%; LMCB flat; LMCK flat; LTRPA -0.9%; LTRPB +2.2%; QVCA +0.8%; LBRDA +0.1%; OTCQB:LBRDB flat; LBRDK -0.1%.
Wed, May 27, 10:37 AM
- What seemed to set up as a pitched bidding war for Time Warner Cable (TWC -0.6%) -- between John Malone of Charter Communications (CHTR -1.5%) and "France's Malone," Patrick Drahi of Altice (OTC:ATCEY) -- ended relatively quickly, as Drahi told a parliamentary hearing that Altice wasn't prepared to take on such a big deal so fast.
- Instead, Charter assembled a buyout of TWC and Bright House in a deal valued at $78.7B, including debt.
- "I didn't follow up on the exchanges we had on Time Warner Cable that were mentioned in the media because we were not ready," Drahi said of a deal that would have quadrupled Altice's U.S. employees to nearly 120,000 in a market it was just beginning to enter, with a $9.1B Suddenlink purchase.
- But he says that consolidation is far from over in the U.S.: "Time is on our side ... The two leaders Comcast and Charter will not be able to buy anything else because of their size so we will have an open boulevard ahead of us ... If I buy five small operators, I can be as big as Time Warner Cable."
- Would that mean attention turns to possible target Cablevision (CVC; down 1.8% today, but up 24.4% over the M&A frenzy of the past week)? Cablevision's head-to-head competition with Verizon FiOS is no problem: "It's good actually since it means they know how to compete."
Tue, May 26, 8:37 PM
- With attention already starting to shift to regulatory approval, Charter Communications (CHTR +2.5%) CEO Tom Rutledge says his company's $55B acquisition of Time Warner Cable (TWC +7.3%) will do better with the FCC than Comcast's: Think small.
- "If you look at the ecosystem, who we're playing with in terms of other competitors, they're very large, and we'll still be a relatively small company compared to the large phone companies, compared to Comcast, compared to the wireless companies," he told CNBC.
- Charter's simultaneous deal for Bright House Networks may pump up its own leverage, but it was critical to the TWC bid, says analyst Craig Moffett: Virtually debt-free Bright House and its borrowing capacity likely added as much as $18/share to Charter's $195.71/share offer. Moffett says TWC's handling of Altice's (OTC:ATCEY) counter-play was masterful.
- About that debt: TWC bondholders are still nervous about the combined load (While the firm's 30-year bonds rose 11.7% today, they're still down about 16% from last month). Moody's is likely to push TWC into junk rating territory as debt-to-EBITDA rises from TWC's 2.97 to about 4.79 for the combination. But again, Bright House's addition and "conservative voice on the board" may be mitigating the effects.
- And MoneyBeat's deal tally: Aside from big winner TWC, winners include Goldman Sachs (NYSE:GS), (eventually) rewarded for backing Charter, and UBS, working as sole adviser to Bright House; Losers include Comcast backer JPMorgan Chase (NYSE:JPM), and Deutsche Bank (DB -3.4%) -- a Charter backer back when, but unseen in the new deal.
- Previously: Charter to merge with Time Warner Cable, buy Bright House (May. 26 2015)
Tue, May 26, 9:22 AM
- Time Warner Cable (NYSE:TWC) is up 5% premarket, to $179.75, following confirmation of Charter Communications' (NASDAQ:CHTR) plan to acquire it for roughly $195.71/share. Charter is up 0.3% early.
- The valuation puts TWC's enterprise value at $78.7B and allows for $100 in cash and $95.71 in "New Charter" stock (equal to 0.5409 Charter shares).
- As part of the deal, Charter's acquiring Bright House Networks for $10.4B, finishing a deal it was pursuing during Comcast's aborted pursuit of TWC. That deal's for $2B in cash, $2.5B in convertible preferred partnership units and $5.9B in common partnership units.
- As speculated, Liberty Broadband (NASDAQ:LBRDA) is investing $5B and will own 19% of New Charter as well, while Advance/Newhouse (owners of Bright House) will own 13% of New Charter.
- FCC Chairman Tom Wheeler: “The FCC reviews every merger on its merits and determines whether it would be in the public interest. In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved.”
- Previously: Charter to merge with Time Warner Cable, buy Bright House (May. 26 2015)
- Previously: WSJ: FCC's Wheeler reassuring cable execs mergers can happen (May. 21 2015)
- Previously: Bankers hustling to fund a Charter-TWC merger (May. 15 2015)
- Press release
Tue, May 26, 6:22 AM
- Charter Communications (NASDAQ:CHTR) has agreed to buy Time Warner Cable (NYSE:TWC) for $55B, finally clinching an agreement after its early 2014 bid was rejected and Comcast abandoned its offer.
- Charter will pay $195.71 a share - 14% above Time Warner Cable's May 22 close - with $100 in cash and the remainder in its own stock, according to a statement Tuesday.
- Bright House Networks, a smaller cable company Charter previously agreed to buy, will also be merged into the combined entity.
- TWC +9.1% premarket
TWC vs. ETF Alternatives
Time Warner Cable Inc provides video, high-speed data and voice services. The Company also offers security and home management services, networking and transport services and enterprise-class, cloud-enabled hosting, managed applications and services.
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