By Liana B. Baker and Soyoung Kim
Jan 23 A Time Warner Cable Inc investor that
also has a large stake in would-be predator Charter
Communications Inc is urging Time Warner Cable to talk
to its smaller rival, after weeks of Charter's aggressive
campaign to win over investors.
T. Rowe Price Group, Charter's third-largest
shareholder with a stake of more than 5 percent, this week wrote
to Time Warner Cable, urging the No.2 cable company to
have talks with Charter about a possible deal, according to
people familiar with the matter.
With the letter, Charter, which has been on a roadshow
meeting with Time Warner Cable shareholders for the past two
weeks, may be seeing the first fruits of its campaign to rally
investors to support its $37.3 billion offer. Time Warner has
insisted the Jan. 13 bid was inadequate.
"Charter has asked Time Warner Cable shareholders to
approach Time Warner Cable management and board. This letter is
consistent with that," said ISI analyst Vijay Jayant.
As of Sept. 30, T. Rowe owned 5.16 percent of Charter shares
and 2.3 percent of Time Warner Cable shares. T. Rowe is Time
Warner Cable's eighth-largest shareholder and Charter's
third-largest shareholder, the latest publicly available filings
show, according to Thomson One.
Besides T. Rowe, there is only one other investor, the
Vanguard Group, that has a top 10 ownership position in both
cable companies. Vanguard is Time Warner Cable's No.2
shareholder with a 5.01 percent stake and is also Charter's No.5
shareholder with a 3.31 percent stake, according to latest
Members of Time Warner Cable's board have read the T. Rowe
letter, but their reaction was not immediately clear, according
to the people familiar with the matter.
It also wasn't known whether T. Rowe was urging Time Warner
Cable to consider a deal at a specific price.
Representatives from Charter, T. Rowe Price and Liberty
Media declined to comment. A spokeswoman from Time Warner Cable
said, "Time Warner Cable has an active, ongoing dialogue with
many of its shareholders."
T. Rowe has a history of activism in the cable industry. In
2007, it opposed a buyout of Cablevision by the
controlling shareholder, the Dolan family. The Baltimore-based
asset management firm was also an influential opponent of
Michael Dell's initial offer to buy out Dell Inc last year.
Charter, backed by billionaire John Malone's Liberty Media
Corp, announced its $132.50 per share bid for Time
Warner Cable on Jan 13, which the larger rival promptly rejected
as too low. Time Warner Cable responded that it was open to a
deal at $160 per share.
Most investors expect any higher bid from Charter will fall
short of Time Warner Cable's asking price, raising the specter
of a proxy battle. Charter has until Feb. 15 to nominate a slate
of directors if it wants to go that route.