Charter (CHTR) Makes $61.3 Billion Bid For Time Warner Cable (TWC)

NEW YORK (TheStreet) -- Charter Communications (CHTR) announced Monday that it made an offer to buy Time Warner Cable (TWC) for $61.3 billion, including debt.

Shares of Charter were up 0.6% to $135, and Time Warner Cable rose 0.6% to$133.25 in after hours trading.

The proposal would see Charter Communications pay $132.50 per share of Time Warner Cable stock in cash and stock. The proposal is just 10 cents higher than the cable company's closing price of $132.40. According to Bloomberg the bid is the third-largest bid for any global company since 2009.

TheStreet Ratings team rates CHARTER COMMUNICATIONS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHARTER COMMUNICATIONS INC (CHTR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 73.04% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The debt-to-equity ratio is very high at 234.52 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.20, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Media industry and the overall market, CHARTER COMMUNICATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CHTR Ratings Report

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