By Lauren Pollock
Charter Communications Inc. is formally urging Time Warner Cable
Inc.'s shareholders to reject the $45.2 billion buyout agreement
the company reached last month with Comcast Corp.
Charter, which approached Time Warner Cable about a deal
multiple times beginning last May, argued in a regulatory filing
that the Comcast agreement poses a high regulatory risk, has a high
risk of delay and was arrived at via a flawed process.
A representative from Time Warner Cable responded to Charter's
filing by saying, "We are fully committed to our merger with
Comcast, which we believe is in the best interests of
shareholders." A representative from Comcast declined to
comment.
Months of off-and-on negotiations led to Comcast's all-stock
agreement to buy Time Warner Cable in mid-February, a deal that
would combine the nation's two biggest cable operators and thwarted
Charter's monthslong pursuit.
Specifically, Charter argued the Comcast deal is subject to a
high degree of regulatory risk, adding it is "difficult to imagine
a transaction that could concentrate the industry more," as Comcast
would control nearly 40% of the broadband market after the
deal.
In addition, the company alleged the deal could drag on to the
third quarter of 2015 and then could still fail to close, hurting
Time Warner Cable's relationships with suppliers, customers and
other business partners.
Charter alleged Time Warner Cable's board refused to
meaningfully engage with it on a potential business combination
even after deciding to pursue a deal with Comcast. It also agreed
to limit its own ability to consider any competing bid or to
provide bidders with the due diligence, Charter said.
Meanwhile, Charter noted the value of the offer has declined
based on Comcast's sliding stock price, which is off about 13%
since the deal was unveiled. It argued the deal fails to address
Comcast's Class B shares, which won't be diluted, and doesn't
address divestitures, which may be discounted to some degree.
Charter is the fourth-largest cable operator in the U.S. and its
biggest shareholder is Liberty Media Corp., whose chairman is cable
pioneer John Malone. The company made its arguments in a filing to
solicit proxies from Time Warner Cable shareholders in opposition
to the deal.
Write to Lauren Pollock at lauren.pollock@wsj.com
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