(Adds analyst quote)
By Nadia Damouni and Liana B. Baker
NEW YORK, Dec 13 (Reuters) - Charter Communications Inc
is preparing to send an offer letter to acquire Time
Warner Cable Inc as soon as next week, a source close to
the matter said on Friday.
The offer is expected to be less than $135 per Time Warner
Cable share and will be a combination of cash and stock, said
the source, who asked not to be named because the matter is not
A Charter spokesman declined to comment, while a Time Warner
Cable spokeswoman also declined to comment.
Time Warner Cable shares barely budged Friday afternoon,
closing 35 cents higher, or 0.2 percent, at $131.40.
Any bidder for Time Warner Cable would likely need to offer
at least $150 per share to be considered seriously by the board,
one person familiar with the matter told Reuters last week.
Barclays credit analysts said the lower bid price reported
on Friday, "could extend the process, potentially leading to
either negotiations on deal terms or to a proxy process should
Time Warner Cable reject the overture."
Event-driven investors have piled into the stock since
reports emerged that Time Warner Cable was a takeover target.
Filings show Paulson & Co owned 1.4 percent of Time Warner Cable
shares as of Sept. 30, while the hedge fund Corvex Management
owned 0.06 percent as of that date.
The Barclays note said that nominations for Time Warner
Cable's board begin on Jan. 15, "so a bid submission prior to
this makes sense."
Charter is much smaller than Time Warner Cable, but has been
trying to line up financing from several banks, including
Goldman Sachs Group Inc, Bank of America Corp and
Deutsche Bank AG, to swing the transaction, sources
Still, some analysts were concerned about the level of debt
the combined entity would carry after a deal.
Charter has a market value of about $13 billion, compared
with Time Warner Cable's $37 billion.
Time Warner Cable, the No. 2 cable provider in the United
States, is a potential target of several competitors, which are
eager to scoop up the company to boost their subscriber bases.
Another possible suitor is Comcast Corp, which has
tapped JPMorgan Chase & Co for advice on a possible bid.
A formal move by Charter, the No. 4 U.S. provider, could
draw Comcast into the game. So far, Comcast, the nation's
largest cable provider, does not plan to make a pre-emptive bid
for Time Warner Cable, sources told Reuters last week.
A Comcast, Time Warner Cable merger could run afoul of
antitrust regulators, analysts said.
Privately held Cox Communications is another potential
Charter Chief Executive Tom Rutledge said last week during a
UBS conference that the company could pursue major opportunities
if it reached a larger scale.
Cable billionaire John Malone's Liberty Media Corp
owns a 27 percent stake in Charter.
Charter shares closed 45 cents, or 0.34 percent, down at
Bloomberg earlier reported that Charter was preparing a bid
for under $140 per share.
(Additional reporting by Soyoung Kim and Nicola Leske in New
York; Editing by Jeffrey Benkoe and Andre Grenon)