Time Warner Cable could ward off a takeover...
Time Warner Cable could ward off a takeover by Charter Communications by making a defensive acquisition of another company, such as Cox Communications, said Moody’s Investors Service in a report released Thursday. A takeover of Cox would allow Time Warner…
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Cable “to keep its investment-grade rating and fend off a John Malone-led leveraged takeover by Charter,” and give the combined company more than 16 million subscribers, Moody’s said. “An investment-grade rating is key to ensuring consistent and efficient market access for a company with around $27 billion of debt, and to keep it TWC may need to make the first move by becoming an acquirer itself,” said Moody’s Senior Vice President Neil Begley in a release. The transaction would also benefit Cox, he said. “Like other midsized companies, Cox Communications is likely to face issues of scale in the future, and won’t want to be left behind in the race to develop and invest in advanced technology.” Moody’s said Cablevision would also be a possible target for a defensive takeover by Time Warner Cable. “But such a transaction could be problematic as the family that controls Cablevision would likely prefer a stock deal over cash,” and they might “take a more aggressive role in the combined entity’s governance,” Moody’s said. In a third scenario, Charter could leave Time Warner Cable alone because the takeover would require “significant debt financing,” Moody’s said. “In that event, TWC would keep its investment-grade rating, leaving bondholders to gamble that Mr. Malone will keep his distance in the future.”