Charter Communications Inc. formally offered Monday to acquire larger rival Time Warner Cable for $37.3 billion, signaling the start of what is likely to be a contentious battle for control of the No. 2 U.S. cable operator.
Charter, the No. 4 cable operator, proposed paying $132.50 per share — barely higher than where Time Warner Cable shares closed Monday — consisting of around $83 per share in cash and its own stock.
Monday's offer is the boldest sign yet that cable billionaire and dealmaker John Malone thinks that new managers could do a better job running the company, which has fallen behind and underinvested in taking on competitors and on digital technology.
Including debt, the deal is worth $62.35 billion. Time Warner Cable shareholders would get 45 percent ownership in the combined company.
Charter said Monday that it held discussions with Time Warner Cable, which is led by CEO Rob Marcus, but the company wanted a higher bid and talks have not been constructive. Charter now plans to take the deal directly to Time Warner Cable shareholders.
"They came back to us with a design to be dismissive. They have not engaged with us. All of the conversations have been one way," Charter's CEO Tom Rutledge said in an interview.
Rutledge, who spent 23 years at Time Warner Cable earlier in his career, said Time Warner Cable shareholders should be happy with the $83 per share cash component of the deal, since it is at the same level as the stock price before the takeover speculation began six months ago.
Rutledge admitted that a hostile offer in the friendly cable industry where companies do not directly compete with each other is "unusual" but he said Monday's letter was necessary because talks have not progressed over the past six months.