January 21, 2014 / 7:52 PM / in 4 years

Comcast adds Barclays as adviser on Time Warner Cable deal: sources

NEW YORK (Reuters) - Comcast Corp has added Barclays Plc as an adviser as it evaluates a potential deal for Time Warner Cable Inc, according to people familiar with the matter.

Comcast, the top U.S. cable company, hired Barclays late last year to review its deal options, along with JPMorgan Chase & Co, which it had earlier tapped for advice, the people said.

The people asked not to be named because the matter is not public. Representatives from Comcast and Barclays declined to comment.

Reuters reported on December 6 that Comcast brought in JPMorgan as speculation about cable industry consolidation increased in the prior several months.

After six months of an unsuccessful pursuit, Charter Communications Inc made a formal offer to buy Time Warner Cable for $132.50 per share, or $37.3 billion, based on shares outstanding.

Charter approached Comcast last week to discuss carving up Time Warner Cable’s systems and subscribers, after the second-largest U.S. cable company rejected its offer, Reuters reported. Comcast also has been weighing a bid of its own.

A deal for Time Warner Cable, if consummated, would generate handsome payouts for the banks involved, as well as much-sought-after bragging rights that come with a marquee transaction.

In a successful deal, banks advising Charter would split roughly $74 million to $92 million in advisory fees while Time Warner Cable’s advisers could reap $81 million to $101 million, according to preliminary estimates by consulting firm Freeman & Co LLC.

Charter’s financing banks - led by Goldman Sachs Group, Bank of America Merrill Lynch, Credit Suisse Group and Deutsche Bank - would also share $325 million to $445 million in financing fees, Freeman & Co estimates.

Charter has said it is lining up $20.5 billion in new debt and also arranging $3.5 billion in bridge financing.

Estimating potential fees for Comcast’s advisers is difficult since its deal plans are not yet public.

Time Warner Cable is working with Morgan Stanley, Allen & Company and Citigroup. Charter has turned to Goldman Sachs and LionTree as lead financial advisers, and is working with other advisers that include Guggenheim Securities, Bank of America, Credit Suisse and Deutsche Bank.

Charter, the No. 4 U.S. cable provider, and Comcast are in preliminary discussions about how to structure a potential alliance, Reuters reported last week. One possibility is that Charter buys all of Time Warner Cable and sells off some of its markets and subscribers to Comcast.

It was not immediately clear which geographic markets are under discussion, but analysts have said that Comcast would be interested in Time Warner Cable’s largest markets, such as New York and Los Angeles.

Time Warner Cable, which has said it was open to a deal at the right price - or $160 per share - considers Comcast to be the best merger partner because the larger rival can afford to make an all-cash offer and provides a better geographic fit, separate people familiar with the matter have said.

Time Warner Cable was trading at $134.50 late on Tuesday.

Reporting by Soyoung Kim and Liana Baker in New York; Editing by Steve Orlofsky and Jonathan Oatis

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