Time Warner Cable open to merger talks with Charter - sources

By Reuters

Apr 28, 2015 12:17 AM EDT

Time Warner Cable Inc (TWC.N) is open to merger discussions with Charter Communications Inc (CHTR.O) following a failed $45 billion bid by Comcast Corp CMSA.O, according to people familiar with the matter.

Friendly negotiations between the two companies would be in sharp contrast to their acrimonious exchanges in 2013 and early 2014 that ended with Time Warner Cable rejecting unsolicited approaches by Charter and instead finding a white knight in Comcast.

While Charter has yet to make a formal offer, Time Warner Cable believes its smaller peer may be willing to make a bid that is more attractive compared with its takeover attempt two years ago, the people said.

Time Warner Cable also views Charter's stock as a more valuable currency than it did last year given its stock performance since then, the people said. Charter shares are up 33 percent in the last 12 months. Time Warner Cable also is open to deals with companies other than Charter, the people added.

The sources asked not to be identified because the deliberations are confidential. Time Warner Cable and Charter both declined to comment.

Last Friday, Comcast abandoned its $45 billion offer for Time Warner Cable after U.S. regulators raised concerns that the merger would give Comcast an unfair advantage in the cable TV and Internet-based services market.

Analysts expecting Charter to pursue TWC have debated whether Charter would top its previous bid in an effort to secure a friendly deal, or, facing no rival buyer, try to get TWC for less.

Controlled by John Malone's Liberty Media Corp (LMCA.O), Charter had bid $37.3 billion or about $132.50 per share for TWC last year before being beaten by Comcast, whose all-stock deal was initially worth $158.82 per share.

Malone, a deal maker known as the "cable cowboy," was asked in November whether he would pursue TWC if the Comcast deal fell through. "Hell yes," he replied.

Charter was also part of the complicated Comcast deal that unraveled. It would have acquired control of subscribers divested by the merged company. Last month Charter also agreed to acquire Bright House Networks for $10.4 billion.

Time Warner Cable has the right of first refusal in the event of a Bright House sale, however, and it could see such a deal as a way to avoid being bought by Charter, analysts have said.

Earlier on Monday, the Wall Street Journal reported that Time Warner Cable had reached out to Cox Communications about a potential merger, a report that both companies later denied.

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