Time Warner Cable has a $US55 billion offer on the table

Charter Communications is close to a $US55 billion deal to buy Time Warner Cable for $US195 a share in cash and stock, Bloomberg News reports.

According to those familiar with the agreement, Charter could announce the acquisition as soon as Tuesday.

The deal would combine Time Warner, the second largest cable provider, with Charter, the fourth largest cable operator in the US.

Last year, Comcast offered to acquire Time Warner for less money — $US45 million. However, Comcast pulled its offer amid intense scrutiny from regulators, as The New York Times notes.

“Since the collapse of the Comcast agreement,” The Times’ Michael J. de la Merced writes, “Charter has worked to win over its onetime reluctant target, focusing on a friendly deal and acknowledging that it would have to pay a much higher price tag.”

That high price tag may also be due to last-minute competition Charter got from French billionaire Patrick Drahi’s Altice SA, according to Bloomberg.

“The idea that Time Warner Cable and Charter are merging isn’t a surprise, but the price raises some eyebrows,” Craig Moffett, an analyst at MoffettNathanson in New York, told Bloomberg. “Altice undoubtedly contributed to Charter having to pay such a steep price to close the deal.”

Bright House Networks, another cable company, will also take part in the $US55 million deal, which will merge it into TWC and Charter to create one giant entity. Charter Chief Executive Tom Rutledge is expected to be CEO of the new combined company.

Time Warner Cable is currently valued at $US48.4 billion. The proposed purchase price of $US195 a share is 14% higher than Time Warner’s closing stock price was on Friday, The New York Times pointed out.

The resulting company would make it the second largest cable company in the US. It would control cable and internet for about 20 million subscribers, making it a strong rival for companies like Comcast and DirecTV, as The Wall Street Journal notes.

Still, a merged Time Warner and Charter would be playing “catch up” to Comcast, which has already invested a lot of money into technology that makes it easier for TV viewers to binge-watch shows like they can on the web, according to the Journal.

The $US55 million deal could also face scrutiny from antitrust regulators.

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