The price for the trophy acquisition, $195.71 per share, including $100 in cash, values Time Warner Cable's equity at nearly $57 billion and topped many projections.
How did that happen?
Robert Routh of FBN Securities Inc. said that a number of factors accounting for the price have changed since Charter made a hostile bid for Time Warner Cable in early 2014.
"They wanted to get a deal done; they wanted it to be friendly, not hostile," he said.
After Comcast (CMCSA) dropped its acquisition of Time Warner Cable in April, Charter seemed to be the last worthy suitor for the second-largest U.S. cable operator. The entrance of Altice SA (ATSVF) into the U.S. cable frenzy through the $9.1 billion purchase of Suddenlink Communications may have provided Charter with motivation to reach a deal quickly.
Malone and Charter had been pursuing Time Warner Cable since 2013. Charter had offered $114 per share in June 2013 and approximately $127 per share in October 2013, before offering a bid that Time Warner Cable said was in the low $130 range in January 2014.
Time Warner Cable Chairman and CEO Rob Marcus publicly said in that the company would hold talks about a bid of $160 per share, with $100 in cash and $60 in stock. Marci Ryvicker of Wells Fargo Securities LLC wrote in a research report that she anticipated a price of about $175 per share.
The emergence of Altice arguably changed the calculations.
"The price is definitely higher than what people were expecting, but with Altice circling the U.S. market, it probably pushed Charter to move faster." said Macquarie Capital analyst Amy Yong in an email.
Moody's Investors Service analyst Neil Begley wrote in an email that Altice likely had a role in the inflated price, even if it was indirect.
Begley suggested that Charter would likely look to trade markets with other cable operators following the deal, which would improve the outlook for its business services unit.
"The commercial business is presently the best growth story in the business and rationalizing and optimizing the footprints within the industry are of paramount importance continue the pace of growth," he wrote. Charter could pursue "a very large realignment swap transaction" in a market like Los Angeles or New York, he suggested, or undertake a "a burst of smaller market rationalization."