SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant þ Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
¨ | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
þ | Soliciting Material Pursuant to § 240.14a-12 |
TIME WARNER CABLE INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
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(2) | Aggregate number of securities to which transaction applies:
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) | Proposed maximum aggregate value of transaction:
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On January 15, 2014, Time Warner Cable Inc. posted the following presentation to its website.
Charters
Proposal is Grossly Inadequate January 15, 2014 |
2
Forward-Looking Statements and Disclaimers
ADDITIONAL INFORMATION
Time Warner Cable expects to file a proxy statement with the U.S. Securities and Exchange
Commission (SEC) and to provide any definitive proxy statement to
its
security
holders.
INVESTORS
AND
SECURITY
HOLDERS
OF
TIME
WARNER
CABLE
ARE
URGED
TO
READ
THIS
DOCUMENT
AND
ANY
OTHER
DOCUMENTS
FILED BY TIME WARNER CABLE WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security
holders will be able to obtain free copies of the definitive proxy statement (when available) and any other
documents filed with the SEC by Time Warner Cable through the web site maintained by the SEC
at http://www.sec.gov. CERTAIN INFORMATION REGARDING PARTICIPANTS
FORWARD-LOOKING STATEMENTS AND DISCLAIMERS
Time Warner Cable and certain of its directors and executive officers may be deemed to be
participants in a solicitation under the rules of the SEC. Security holders may
obtain information regarding the names, affiliations and interests of Time Warner Cables directors and executive officers in Time Warner Cables
Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the
SEC on February 15, 2013, and its proxy statement for the 2013 Annual Meeting, which
was filed with the SEC on April 4, 2013. These documents can be obtained free of charge from the sources indicated above. Additional
information regarding the interests of these participants in any proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will also be included in any proxy statement and other relevant materials to be
filed with the SEC if and when they become available. This
communication does not constitute an offer to buy or solicitation of an offer to sell any securities. This document includes certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995 and we
intend that all such statements be covered by the safe harbor provisions of the federal
securities laws. Statements herein regarding future financial and operating results and any other statements about future
expectations constitute forward-looking statements. These
forward-looking statements may be identified by words such as believe, expects,
anticipates, projects, intends, should,
estimates or similar expressions. These statements are based on managements current expectations or
beliefs, and are subject to uncertainty and changes in circumstances. Actual results may
vary materially from those expressed or implied by the statements herein due to changes
in economic, business, competitive, technological, strategic and/or regulatory factors, and other factors affecting the operations of Time
Warner Cable. More detailed information about these factors may be found in filings by
Time Warner Cable with the SEC, including its most recent Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. Time Warner Cable is under no obligation to, and expressly disclaims any such obligation to, update
or alter its forward-looking statements, whether as a result of new information, future
events, or otherwise. The materials herein may contain certain previously published third-party material. Unless
otherwise indicated, consent of the author and publication has not been obtained
to use the material as proxy soliciting material. |
3
Charter has made a number of claims in its public comments about
TWC and the
Charter proposal that we believe reflect a fundamental lack of understanding of our
operations and strategy
We will address these claims in due course. However, none of what Charter has
claimed changes the simple fact that its proposal is grossly inadequate
As such, these materials focus on TWCs value as a one-of-a-kind asset that
Tom Rutledge correctly has identified as the biggest and best M&A option
available Presentation Context
|
4
Charters proposal fails to reflect the significant value of TWCs high quality
assets, unique
scale,
synergy
potential,
growth
opportunities
and
strong
financial
position
It is materially below precedent transaction multiples, especially transactions of a
similar scale to TWC
The proposal fails to adequately compensate and protect TWC shareholders for the
risks of owning Charters stock
We have engaged with Charter, but Charter is not prepared to pay
for a one-of-a-
kind asset and instead chose to go public with another low-ball proposal in an
attempt to steal the Company
Charters Proposal is Grossly Inadequate
The TWC Board of Directors unanimously rejected Charters
third grossly inadequate proposal
|
5
Starting
in
May
of
2013,
TWC
management
engaged
with
Charter
and
Liberty
in
an
attempt
to
understand their approach. After numerous meetings in May, June, and July, Charter made
a low- ball offer of $114 per TWC share, which was rejected by our Board
Charter did not re-engage with TWC until late October, when it made another low-ball
offer of $127 per TWC share, which was also rejected by our Board
In December, TWC management had numerous conversations with Charter management in order to
understand:
On December 27, TWC management made clear to Charter:
TWC Has Engaged With Charter
Rather than pursuing this path, Charter has chosen to go public with its third
low-ball offer trying to pressure TWC's Board into selling the Company at a grossly
inadequate price
Charters proposal and operational plan
Charters view on synergies and tax attributes
Charters proposed capital structure and financing plan
Our concerns about the highly uncertain value of Charters stock
That
our
Board
is
open
to
a
transaction
with
Charter
at
$160
per
TWC
share
consisting
of
$100
in
cash
and
$60 per share of Charter common stock, with a 20% symmetrical collar
|
6
Charters proposal is well below recent cable transactions, especially transactions of a
similar scale to TWC
Only true comparable deal from a scale perspective, AT&T Broadband, sold in 2002 for ~21x
EBITDA, ~8x higher than the average trading multiple of public comparable cable
companies at the time
The
Charter
proposal
to
acquire
TWC
is
at
a
significant
discount
to
Charters
standalone
public trading multiple
Charter Has Made 3 Proposals to TWC
(1)
(2)
Recap of Charters Grossly Inadequate Proposals
July 2013
October 2013
January 2014
Consideration
Per
TWC
Share
Cash
$79.11
$82.54
$82.54
Stock
$34.56
$44.49
$49.96
Exchange Ratio
0.275x
0.329x
0.372x
Total
$113.67
$127.03
$132.50
Premium / Discount to Current TWC Share Price
(16.4%)
(6.6%)
(2.6%)
Adjusted 2014E EBITDA Multiples:
Implied TWC Takeover Multiple
7.2x
Charter Trading Multiple
9.4x
Source: Company filings, Wall Street research estimates. EBITDA estimates throughout the
presentation are based on Wall Street consensus EBITDA estimates for each company less stock-based
compensation expense if not already factored into estimates. Wall Street analysts may use
slightly different definitions for EBITDA for each company. Note:
Current prices as of 1/14/2014 close.
1.
Based on consensus estimates of TWC 2014E EBITDA post stock-based compensation of $8.3
billion. 2.
Based on consensus estimates of Charter 2014E EBITDA post stock-based compensation of $3.2
billion. |
7
TWC is the Premier Pure-Play Cable Company
Industry Leading Business
$22.0 billion of Last Twelve Months
Revenue (9/30/2013)
$18.4 billion residential services
$2.2 billion business services
$1.4 billion advertising & other
15.1 million customers (9/30/2013)
14.5 million residential services
0.6 million business services
Ideally situated to capitalize on future
growth opportunities as a result of our
robust network, operational expertise and
financial flexibility
Ongoing product roll-outs and
improvements, including:
Robust WiFi network
IntelligentHome
TWC TV apps (for iOS, Android, Roku,
Samsung Smart TV, Xbox and Kindle
platforms)
Cloud-based guide
Cloud services for businesses
Extensive Geographic Footprint
Owns well-clustered cable systems
located in key geographic areas,
including:
New York State
(including New York City)
Southern California
(including Los Angeles)
Texas
The Carolinas
Midwest (including Ohio, Kentucky
and Wisconsin)
Innovative Technology Pioneer
Recognized leader in technical innovation,
including 8 Emmys for technology and
engineering
State-of-the-art network
Nationwide fiber backbone
Deep metro fiber assets
Increasing standard HSD speeds to
50x5 and top HSD speeds to 300x20 in
2014
Internally managed content delivery
network for IP video delivery
Cutting-edge video services
Most advanced linear IP video product
in industry, with up to 300 live linear
channels available via multiple
platforms
Average of 179 HD channels per
market
All digital in NYC and in the process of
going all digital in other markets
TWC-Serviced States
(1)
1.
Represents states where TWC has video customers. |
8
TWC is Uniquely Positioned to Deliver Scale
in the Cable Industry
Sources:
Public filings, company websites, SNL Kagan.
Notes:
PSUs, or primary service units, defined as the sum of video, data, and voice subscribers as of
Q3 2013. Comcast revenue reflects cable operations only.
Cox revenue as of 2012 results per company website.
Charter and Cablevision LTM revenue pro forma for Bresnan transaction.
Top Cable Players by PSUs
($ in billions, PSUs and passings in millions)
LTM 9/30/13
Revenue
$41.3
$22.0
$9.6
$8.3
$6.2
$2.2
$1.6
Passings
53.7
29.8
10.4
12.8
5.0
3.1
2.8
TWC is the only independent, publicly traded cable company of scale
52.4
28.2
11.6
11.2
7.9
2.8
2.3
Comcast
TWC
Cox
Charter
Cablevision
Suddenlink
Mediacom |
9
Precedent Forward EBITDA Multiples (over $1 billion)
Proposal does not reflect the scale and quality of TWCs assets and the estimated synergy
potential Announcement Date:
Jun-2010
Aug-2011
Jul-2012
Mar-2013
$71.4
$17.6
$1.4
$3.0
$1.0
$1.4
$6.6
$1.6
$2.6
$62.4
Deal Value
($ in billions):
Apr-2005
Dec-2001
Premium to
Industry Trading
Multiples:
Jun-2012
Jul-2012
Feb-2013
Jan-2014
(1)
Target Subs as a % of
Acquiror Subs:
143%
30%
10%
6%
NA
30%
NA
7%
NA
267%
Strategic Buyer
Large Scale Transactions
Financial Buyer
Charters Proposal is Significantly Below
Precedent Transaction Valuations
8.0x
4.4x
2.5x
2.7x
1.4x
1.7x
1.7x
0.6x
1.6x
(1.0x)
8.2x
8.4x
8.0x
8.3x
8.3x
8.0x
8.6x
7.2x
Comcast /
AT&T
Broadband
TWX &
Comcast /
Adelphia
CVC /
Bresnan
TWC /
Insight
Oak Hill /
WaveDivision
Cogeco /
Atlantic
BC Partners /
Suddenlink
Charter /
Bresnan
Liberty /
Charter
Charter Proposal
20.8x
13.5x
$160 proposal TWC management discussed
with Charter implies 8.2x fwd. multiple
Sources: Public filings, Press releases, Mergermarket, Factset, Wall Street research
estimates.
1. Industry averages based on average of ADLAC, MCCC, ICCI, CVC, CMCSA, TWC, CVC and CHTR one
year forward trading multiples around announcement date when available, and excluding target
multiple if listed (e.g., Charter, TWC).
|
10
Acquiror / Target
Ann. Date
Deal Value
($ billion)
Sizeable
Asset
Top
Markets
Significant
Synergies
Shared
Syn.
Tax
Assets
EBITDA
Multiple
Prem. to
Industry
Comcast / AT&T
Broadband
Dec-01
$71.4
20.8x
8.0x
TWX & Comcast /
Adelphia
Apr-05
$17.6
13.5x
4.4x
CVC / Bresnan
Jun-10
$1.4
8.2x
2.5x
TWC / Insight
Aug-11
$3.0
8.4x
2.7x
Oak Hill /
WaveDivision
Jun-12
$1.0
8.0x
1.4x
Cogeco / Atlantic
Broadband
Jul-12
$1.4
8.3x
1.7x
BC Partners /
Suddenlink
Jul-12
$6.6
8.3x
1.7x
Charter / Bresnan
Feb-13
$1.6
8.0x
0.6x
Liberty / Charter
Mar-13
$2.6
8.6x
1.6x
TWC (per Charter Proposal)
7.2x
(1.0x)
(2)
$62.4
(3)
(1)
(4)
Charters Proposal Significantly Undervalues
TWCs Unique Attributes
Sources: Public filings and SNL Kagan; Press releases, Mergermarket, Factset, Wall Street
research estimates. 1. Based on % of basic subscribers in Top 20 DMAs.
2. Target shareholders benefit from post-transaction synergies.
3. 1-Year Fwd. EBITDA multiple.
4. Industry averages based on average of ADLAC, MCCC, ICCI, CVC, CMCSA, TWC, CVC and CHTR one
year forward trading multiples around announcement date when available, and
excluding
target
multiple if listed (e.g., Charter, TWC). |