NEW YORK (TheStreet) -- Maybe Charter Communications' (CHTR) bid for Time Warner Cable (TWC) could take a twist that resembles a recent takeover drama between clothiers Men's Warehouse (MW) and Joseph A. Bank (JOBS).
Time Warner Cable has the ability to pull what's called a "Pac Man" defense where it offers to buy Charter Communications as a means to fend off a bid by the fledgling cable operator and its minority investor, John Malone-chaired Liberty Media, according to equity analysts at JPMorgan.
Currently, Charter Communications is offering Time Warner Cable about $130 a share in a cash and stock takeover transaction that could catapult the combined company to the top of the cable industry. Time Warner Cable, however, called Charter's heavily debt-financed bid risky and undervalued. The company also indicated it was willing to selling at $160 a share, a figure that would be hard for Charter Communications to reach.
Time Warner Cable, however, could shoot back at Charter Communications with a takeover plan as a means to either get the company to sweeten its bid or get the company off of its back, according to a Wednesday note from Philip Cusick of JPMorgan.
"We believe that investors want cable consolidation as the scale benefits are well understood, but have so far been disappointed by the level of Charter's bid for Time Warner Cable," Cusick wrote.
"We also believe that Time Warner Cable's management team wants to continue to operate the company, but may be coming around to being more flexible than its recent $160 ask. To defend itself or drive a higher bid from Charter, TWC management could offer a 'Pac-Man' bid for Charter at the market level or a small premium," the analyst added.