Charter Communications, Inc (NASDAQ:CHTR), the fourth largest cable service provider in the United States is seeking $25 billion in debt financing to help fund its proposal to acquire Time Warner Cable Inc (NYSE:TWX), the second largest cable operator in the country, according to report from the Wall Street Journal based on information obtained from unidentified sources.
John Malone, chairman and executive officer of Liberty Media Corp (NASDAQ:LMCA), the largest shareholder of Charter Communications, Inc (NASDAQ:CHTR) with 27% stake in the cable operator initiated the bid to takeover Time Warner Cable Inc (NYSE:TWC).
In May, Time Warner Cable Inc (NYSE:TWX) rejected the informal offer of Charter Communications, Inc (NASDAQ:CHTR) because the price tag did not represent a premium. Observers in the cable industry noted some challenges confronting Charter Communications including the fact that it is a smaller company with approximately $14 billion market capitalization compared with Time Warner Cable’s $38.5 billion market capitalization.
Malone is serious to strike a merger deal between Charter Communications and Time Warner Cable because he wants to shake up the cable industry and to regain his status as Cable King. During the 1980s to 1990s, Malone led Tele-Communications, Inc (TCI), then largest cable operator in the United States.
Today, Comcast Corporation (NASDAQ:CMCSA) holds the leading position in the industry. It had been reported that the company is considering the idea of submitting its own proposal to takeover Time Warner Cable Inc (NYSE:TWC) or support Charter Communications bid. Many opined that a merger between the two leading operators in the country could attract antitrust scrutiny.
Cox Communications, the third largest cable operator is also contemplating on submitting its own bid or joining other entities to acquire Time Warner Cable. In the past, many perceived the company as takeover target by its peers. Cox Communications made it clear that it is not for sale and it is seeking opportunities to expand its business.
Since June, the stock price of Time Warner Cable Inc (NYSE:TWC) increased by around 40% from $96 to its current trading price at $136.80 per share. The company previously expressed its willingness to consider seriously any bid that represents a premium price tag.