Time Warner Cable Shares Surge on Report of Liberty Media Deal
NEW YORK ( TheStreet) - John Malone's Liberty Media
After being rebuffed earlier in June, Malone is continuing to work on structuring a deal that would be the largest in size since a media industry merger wave over a decade ago, according to the Bloomberg report.
Time Warner shares gained over 8% to $112.01 in Thursday afternoon trading, while Charter shares gained over 5% to $125.72. Liberty Media shares gained over 2.5% to $127.51.
Still, according to the Bloomberg report, Time Warner is not interested in a merger, given the cable giant's larger size.
According to industry analysts, a deal for Time Warner would only likely occur at a significant premium to the company's $30 billion market-plus cap, potentially out of reach of smaller competitors like Liberty Media and Charter Communications.
"Our conclusion is that
Kraft noted Charter would be "highly motivated" to pursue a stock merger with Time Warner Cable given the current premium valuation the company carries in stock markets. The analyst questioned whether Time Warner Cable would see similar benefits of a stock merger and highlighted a cash deal could increase the combined company's leverage to uncomfortable levels.
Charter could also look to acquire Cablevision
Liberty Media's reported interest in Time Warner Cable in recent weeks, creates a cable and media industry intrigue that mirrors a merger wave on Wall Street near the peak of the dot-com bubble a decade ago.
At the Nasdaq market top in the tech bubble, media industry conglomerates such as Time Warner
From 2000 to 2009, the largest media conglomerates wrote down $200 billion in assets as a result of a bad acquisitions and misguided 'strategic' investments, according to The Curse of the Mogul , a sweeping study on why an overstretch of C-Suite ambition has destroyed shareholder value throughout the industry.
Liberty Media, however, has been a savvy acquirer and recent deals such as an over $10 billion acquisition of Virgin Media