They might be after speculation about a transaction fueled a 45% increase in its stock price over the last six months (to $138.22 on Friday), time-warner-cable-logoMoffettNathanson Research’s Craig Moffett says this morning. Some analysts say that a buyer — potentially Charter, Comcast, or Cox — would have to pay $150 a share or more to land the No. 2 cable operator. Moffett says he can’t justify more than $120 — and places his target price for the stock at $108. Time Warner Cable “is not doing well, and using outsized broadband price increases to paper over otherwise terrible operational performance is unhealthy and unsustainable.” A buyer, eager to land TWC, could argue that a high price makes sense because it could run TWC better. But there’s “little secret sauce in the cable business,” Moffett says. The “readily-identifiable synergies” probably amount to just $12 a share, “lower than most expect.” And the odds are low that buyers will engage in a bidding war. As the No. 1 cable operator and owner of NBCUniversal, Comcast “has less of a need for a transaction than anyone else in the industry” — especially if federal regulators demand lots of concessions. Privately held Cox hasn’t shown a burning desire to grow. That leaves Charter, which clearly is salivating over TWC.  If it’s the lone bidder then it wouldn’t have to offer a big premium.  Its pitch to shareholders “is increasingly about the downside if a deal doesn’t happen rather than the upside if it does.” Moffett says.

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