Report: Altice Weighing Charter Offer

So much for taking a breather.

European telecom giant Altice N.V., just two months after spinning off its U.S. cable operations into a separate publicly traded company, is apparently weighing the possibility of going after the second biggest fish in the domestic pond – Charter Communications.

According to CNBC, Altice N.V. chairman and founder Patrick Drahi is lining up bankers to launch a possible takeover of Charter, the second largest cable company in the country, with 17 million video customers. While there is no guarantee Altice would actually make a formal bid, the company has long coveted Charter assets. It was an early bidder for Time Warner Cable in 2015, a prize that Charter eventually won with a bid of more than $80 billion.

Analysts have estimated that any bid for Charter would have to be north of $500 per share to get the company’s attention. That would value the MSO at more than $200 billion.

Charter stock was priced at $401 per share in early trading Wednesday (Aug. 9), up 3% or $11.25 each. The stock settled down later in the day, up 1.4% ($5.41 each) to $395.06 per share. Altice USA stock, which was down 2.3% (71 cents each) to $30.35 per share early Wednesday, was about even at $30.88 each (down 18 cents) later in the day.

Charter has been the subject of merger talk for weeks, with speculation heavy around possible offers being weighed by SoftBank (parent of No. 4 U.S. wireless company Sprint) and Verizon Communications. Charter has declined comment on all of the merger rumors.

Altice USA spun off as a separate public company on June 22, almost exactly one year after closing its purchase of Cablevision Systems on June 21, 2016. Altice USA stock has performed well – it rose 14% in its first two days of trading to $34.30 per share. The stock has settled down since then, but was still above its $30 per share offering price on Wednesday.

Altice USA and its parent are expected to be aggressive buyers of cable properties in the U.S., but Altice N.V. has said it will concentrate on organic growth for the time being.

However, at its rebranding launch in May, Drahi acknowledged past comments where he said being any lower than third in a market wasn’t worth the trouble. With about 4.9 million residential and business customers, Altice USA is the fourth largest cable operator in the country and the eighth largest telecom provider.

“I said, ‘If we are not No. 1, or No. 2, or No. 3, it’s not very exciting,’” Drahi said. “How do you get there? I really don’t know. Or if I do, I can’t say.”

But he later offered a hint at his blueprint for success in other markets.

“I have always been very clear, that first is fixed [networks], then mobile, then content,” Drahi said. “We started in the U.S. with cable. We are too small in cable to go mobile at the moment. But everything is open. We will see.”