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Charter Warns TWC Shareholders That Time Is Running Out To Accept Deal

Says Declining Business Affects TWC’s Value 1/21/2014 11:26 AM Eastern

Charter Communications continued its war of words with Time Warner Cable regarding its unsolicited $61.3 billion bid for the company, warning the cable giant’s shareholders that the longer they wait to accept a deal, the less valuable their holdings become.

“The goal should be to complete a merger agreement now, which creates value for the shareholders of both companies relative to the status quo,” Charter wrote. The company added that with a loss of 813,000 basic video customers in 2013, “TWC’s value to Charter is declining, driven by continued customer relationship and triple play subscriber losses and financing costs from further delays.”   

Charter officially launched a $132.50 per share offer for TWC on Jan. 13, which the second larges cable operator in the country deemed “grossly inadequate,” and countered with a $160 valuation that it believed was a fair price. On Jan. 14, Charter held a conference call with analysts where it criticized TWC’s leadership for mismanaging the company and on Jan. 15 released a Power Point presentation that mapped out its strategy for the company.Time Warner Cable responded with its own presentation on Jan. 15.

On Tuesday, Charter fired its latest salvo, criticizing TWC management for waiting until Jan. 30 —  in concert with its releasing its fourth quarter results — to reveal its operational strategy,  a full 16 days after the first Charter proposal.

“We believe the slow response should at best concern shareholders as to what if any strategy exists today, and could reflect yet another delay tactic for a consensual deal,” Charter said in the presentation.

The Stamford, Conn.-based MSO also clarified that its offer is not a buyout of TWC, but an opportunity for TWC shareholders to participate in a combined entity that has high potential growth prospects. TWC shareholders would own 45% of the combined entity after the deal closes.
Charter said it is in contact with TWC shareholders and its “next steps will be determined by the level of support shareholders demonstrate for this combination at a price that benefits both set[s] of shareholders, and recognizes the substantial ownership retained by TWC shareholders in the proposed combination.

The stocks seemed to be unaffected by the latest barbs form Charter, with TWC down by about $1 each (0.77%) to $134.70 per share in early trading Tuesday. Charter shares were down 78 cents each (0.58%) to $133.51 each in early trading Jan. 21.


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