The Hunt for Time Warner Cable Continues: Now Cox Cable Reportedly Wants In. And Charter Raises $25 Billion for Its Acquisition War Chest WSJ
"Cox Communications is considering jumping into the bidding for Time Warner Cable, according to people familiar with the situation, the latest twist in a fast-evolving takeover battle for the second-largest U.S. cable operator," report Dana Mattioli, Amol Sharma and Martin Peers in the Wall Street Journal.
Separately, The WSJ reports: "Charter Communications is arranging about $25 billion of debt financing as it pursues an acquisition of Time Warner Cable, allowing it to include a hefty cash component in any offer it makes for the New York-based cable operator, according to people familiar with the matter." This second story is reported by Mattioli, Peers and Dana Cimilluca.
In the Cox story, The WSJ says, "Atlanta-based Cox is the nation's third-biggest cable operator, with about 4.5 million TV subscribers, ranking slightly ahead of Charter."
The article continues, "Analysts said Cox, which has a stronger balance sheet than Charter, may be in a good position to pursue a deal. 'In some ways they make perfect sense as a white knight,' said Craig Moffett, an analyst at MoffettNathanson.
"Cox has maintained 'conservative credit metrics' in recent years, including a ratio of debt to earnings before interest, taxes, depreciation and amortization of about 2.7, according to Moody's Investor Services, compared with 3.2 for Time Warner Cable and 5.5 for Charter."
In its story about Charter, The WSJ says, "Charter could be battling other suitors for Time Warner Cable, including Cox Communications and Comcast, both of which are mulling whether to make bids. Time Warner Cable would be more receptive to a sale to Cox or Comcast, a person familiar with the matter has said, in part because of its concerns a deal with Charter could be financially risky since it carries significant debt relative to its earnings.
"The risks are highlighted by the size of the debt financing being arranged. Charter already has about $14 billion of debt, more than five times its annual earnings before interest, taxes depreciation and amortization, while Time Warner Cable has about $24 billion of net debt. In a report in July, Moody's Investor Services said that assuming a Charter offer was funded with $20 billion in new debt, the combined company's debt would approach $60 billion, 'the largest high yield non-financial corporate issuer by far.' Moody's said that would raise the price of the debt."
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