Charter Communications shares plunged more than 9% ($12.81 each) in early trading Thursday in the wake of Comcast’s announcement that it will purchase Time Warner Cable in an all-stock deal valued at $66.9 billion.
Charter shares sunk as low as $124.76 (down 9.3%) in early trading, before rebounding slightly to 129.31, down $8.26 each (6%) in afternoon trading Thursday. Time Warner Cable shares were up by as much as 8% ($10.88 each) to $146.19 per share before settling in at $144.67 (up 7% or $9.36 each) by the afternoon, inching closer to the $158.82 per shar valuation of the Comcast offer.
The Comcast deal dealt a blow to Charter, which had spent the past eight-months trying to engineer a hostile takeover of TWC. Earlier this week the Stamford, Conn-based MSO had put forth a new slate for TWC’s board of directors, a move that signaled a possibly bloody and lengthy proxy fight for company.
Comcast had earlier been considering participating with Charter in a TWC deal, with the larger company purchasing some TWC systems in New York and The Carolinas after a formal deal ad been consummated. That apparently escalated to an all-out acquisition of TWC as negotiations continued.
Ironically, one of Charter’s man selling points in its merger pursuit was that the lack of a deal would drive down TWC shares.
On a conference call with analysts to announce the deal, TWC chairman and CEO, who had rejected Charter’s overtures calling them inadequate, said the Comcast deal presented the best opportunity to maximize shareholder value.
Earlier, TWC had insisted on a $160 per share valuation for the company, consisting of $100 in cash $60 in Charter stock and a 20% symmetrical collar to protect both sides in the event of a precipitous drop in share prices. The Comcast deal is strictly an all-stock deal -- and at $158.82 valued closer to TWC's benchmark and a 17% premium to TWC's Feb.12 close of $135.31 each -- and Marcus said there was no basis to compare the two stocks.
“This is really a one-of-a-kind combination,” Marcus said, adding that when it comes time to “turn over the keys” to the company to Comcast, he knows TWC “is in good hands.”
Comcast chairman and CEO Brian Roberts also touted the deal, adding that the combination will enable the combined companies to roll out new products like TV Everywhere faster and expand its affordable broadband initiatives to a wider footprint.
“The company wants to evolve and we are in a unique position to do that,” Roberts said.