After a friendly US$45 billion offer from Comcast (NASDAQ:CMCSA) was ditched amid regulatory concerns, Time Warner Cable (NYSE:TWX) is drawing attention from the French based Altice group (Euronext:ATC).
Altice has already gained access to the US cable TV market, buying a 70% stake in Suddenlink, today for US$9.1 billion from existing shareholders BC Partners, CPP Investment Board and Suddenlink management, which will retain a 30% stake in what is the seventh largest US cable operator.
But Altice has bigger ambitions and it reaffirmed its interest in acquiring Time Warner Cable, noting that the Suddenlink purchase has not altered its stance, according to sources informed on the matter, who stressed that "Altice is quite interested in Time Warner Cable," as quoted by Reuters.
Discussions between Altice and Time Warner Cable are continuing, the source said, but the US group also attracting interest from fellow Charter Communications, the cable number two in the United States, controlled by tycoon John Malone.
With a market capitalization of US$44.5 billion, Time Warner Cable is a large mouthful for Altice, whose market value is around US$30 billion and whose offer, according to the source, will likely be mostly in cash rather than in shares.
Comcast was keen to see the deal completed because it would have reached millions of new subscribers in the US’s largest metropolitan areas like New York and Los Angeles.
The cancellation of the deal has raised questions about Comcast’s future direction but left Time Warner as an appetizing target. Charter Communications had pursued the company before Comcast and may still decide to resume its courtship to become the second largest cable company.
The bid, first announced with grand pomp over a year ago, had surprised most observers, who wondered how the two US cable television market leaders would manage to obtain clearance for the deal from the antitrust authorities.
The authorities expressed concern about the impact the merger would have on consumers, said sources familiar with the discussion told Reuters, given that the combined company would have had unrivaled market share, controlling some 30% of all TV and 55% of all broadband subscribers in the United States.
Alstice’s European origins and worldwide interests should help to reduce concern from the FCC and antitrust authorities.
On Wall Street, Time Warner was trading up 5% to US$165.90 this morning.
Time Warner Cable was a unit of Time Warner until 2009. The two companies are no longer related except by name.