Robbins LLP: Acquisition of Time Warner Cable Inc. (TWC) by Charter Communications, Inc. (CHTR) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Time Warner Cable Inc. (NYSE: TWC) by Charter Communications, Inc. (NASDAQ: CHTR). On May 26, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Charter will acquire Time Warner. Under the terms of the agreement, Time Warner shareholders will receive $100.00 in cash and shares of a new public parent company – New Charter – equivalent to 0.5409 shares of Charter, for each share of Time Warner common stock they own, for a total compensation value of $194.84 per share of Time Warner.
Is the Proposed Acquisition Best for Time Warner and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Time Warner is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $194.84 merger consideration represents a premium of only 13.8% based on Time Warner’s closing price on May 22, 2015. This premium is significantly below the average one-day premium of nearly 18.4% for comparable transactions within the past five years. Further, the $194.84 merger consideration is below the target price of $198.00 set by an analyst at Pivotal Research Group LLC on July 11, 2014.
On April 30, 2015, Time Warner reported strong quarterly earnings results for its first quarter 2015. First-quarter 2015 revenue grew 3.5% year over year to $5.8 billion. First-quarter Adjusted OIBDA was $2.0 billion – up 0.8% year over year. Also in the quarter, Time Warner recorded its best ever overall subscriber performance. In commenting on these results, Time Warner Chairman and Chief Executive Officer Rob Marcus remarked, “By almost any measure, Q1 was our best subscriber quarter ever. We’ve made significant investments to improve our customers’ experience and our operational performance, and they are paying off. We are a far stronger company than we were just five short quarters ago.”
In light of these facts, Robbins LLP is examining Time Warner’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Time Warner shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Time Warner shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.