Comcast, Charter near pact for TWC assets

Michelle Clancy | 28-01-2014

Comcast is said to be willing to acquire New York City, North Carolina and New England cable assets from Charter Communications, if Charter's takeover bid for Time Warner Cable goes through.

Comcast operates in 39 states including New Jersey, Massachusetts, Connecticut and the Carolinas, so the acquisition of the No 4 cable MSO in the United States, would be complementary. For its part, Charter, has offered $132.50 per share ($37.4 billion excluding debt) for TWC, which has rejected the offer as being "grossly inadequate." Most Time Warner Cable shareholders are demanding a bid of more than $140 a share.

However, one of the other reasons that the much larger TWC is reluctant to sell to Charter is the fact that the deal would be highly leveraged: it plans to use debt to finance about $20 billion of the deal.

The markets are TWC markets that Charter would acquire in the transaction, and they account for about three million subscribers. Selling the markets to Comcast would allow Charter to raise cash after the acquisition, thus sweetening the deal for TWC.

According to Reuters, Comcast and Charter have a framework agreement in place for what Comcast would pay for the markets (estimated figures are hovering around $16 million). The final number will depend on what Charter pays for Time Warner Cable.