The main sticking point appears to be, as one might have guessed, the price. Time Warner attacked Charter for their proposal, calling it “grossly inadequate” and reflecting “a fundamental lack of understanding of our operations and strategy.” The target company values itself much higher, as a “one-of-a-kind asset” and “the biggest and best M&A option available.”
Time Warner wants $160 per share, including $100 in cash and $60 in Charter stock. The company documented a timeline of discussions beginning last summer, when Charter made a “low-ball offer” of $114 per TWC share and then made another $127 per share offer in October. Obviously, neither swayed Time Warner executives, so Charter went public with its third offer on Monday.
Charter isn’t taking this beating lying down. It has gone public too, trying to reach Time Warner shareholders after it says TWC management and board “have not meaningfully engaged” with them. Charter argues that they are already offering a large premium — nearly 40% above Time Warner’s price last June before sale rumors began.
“Minimal engagement, one-way information flow and unrealistic price expectations led us to conclude there is no genuine interest from TWC management and its Board to pursue a transaction, and we decided to bring the status of the discussions to shareholders to encourage engagement by TWC, while at the same time preserving our options,” the company wrote in a presentation released on Tuesday afternoon.
Investors and industry watchers will have to closely watch the public dance these two companies play as the weeks go on. Initial negotiation stances have been laid out and battle lines have been drawn.
Both Charter and Time Warner shares declined slightly Wednesday.