The opening shots have been fired in the first big takeover battle of 2014 – for control of Time Warner Cable (TWC) – and lurking behind the scenes is John Malone, the original "cable cowboy" who is eager to get firmly back in the saddle.
TWC, the second-biggest American cable operator, has rejected a takeover proposal from the fourth biggest. TWC called Charter Communications' offer – worth more than $60bn (£36.5bn) including debt, roughly $132.50 per share – a "low ball" offer that is "grossly inadequate".
Mr Malone's Liberty Media is the biggest shareholder in Charter, holding roughly 27 per cent of the stock, and is helping to drive the takeover approach and general consolidation in the sector around the world. TWC is attractive to Mr Malone and Charter for many reasons. As well as its size and reach, it has some trophy assets – its regional operations broadcast LA Dodgers baseball games and LA Lakers basketball games.
The billionaire Mr Malone is a legendary dealmaker in the American media and telecoms markets, who made his fortune around the same time as his old friend and rival Ted Turner. They rode a wave of consolidation in the 1980s and 1990s, and are two of the biggest landowners in the United States.
Mr Malone has recently regained his appetite for a deal. For a start, Liberty Global bought UK-based Virgin Media for roughly $23bn, including debt, last year. And Mr Malone has urged even more cooperation and consolidation among the world's biggest cable companies.
"I think we do want to bring back the days of… Ted Turner, the days when we all got together, because together we provided national scale," Mr Malone said in a rare interview last year with CNBC. "Now I think we have the opportunity to create global scale."
Mr Malone said markets were forcing change on the cable operators, and the biggest players have a unique opportunity to work together. "I think it's at a point in history when the most addictive thing in the communications world is high-speed connectivity," he said. "Everywhere in the world that we operate, we've just seen the public want more and more data rate. Whether it's wireless or wired, there's a big appetite for it. Cable technology right now is the most cost-effective way to deliver that growth in speed." But Mr Malone is not the only media titan involved in this particular deal. The two chief executives at Charter and TWC are also shooting from the hip.
"We are fully prepared to finalise a deal on an extremely expedited basis," said Tom Rutledge, Charter's chief executive who was formerly an executive at TWC.
"We believe that time is of the essence to prepare our companies to meet the challenges of the industry, which is why we have decided to announce the status of our discussions to date to both sets of shareholders," he added.
TWC shareholders would still hold about 45 per cent of the merged company's stock.
Rob Marcus, the chief executive of TWC, was quick to respond: "Charter's latest proposal is a non-starter. First and foremost, it substantially undervalues TWC…"
But he then added: "We are not seeking to sell the company, but… we made it clear to Charter that our board is open to a transaction with Charter at a price of $160 per TWC share, consisting of $100 in cash and $60 per share of Charter common stock."
So, as always, it comes down to price.
If TWC and Charter can't reach an agreement in time, other predators may swoop, with speculation already mounting that Comcast, the leading American cable operator, could enter the fray – either bidding on its own or in partnership with Charter.
TWC's shares have risen roughly 40 per cent since June, amid speculation about cable company mergers.
Its stock price was up about 3 per cent to $136.40 on Tuesday morning, indicating that the market expects there will be a higher offer.
The animal spirits of M&A are back. Watch this space.
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