New York – Time Warner Inc.’s cable unit has filed for an initial public offering that may value the business at more than $40 billion and give investors a stake in the second- largest U.S. cable-TV provider for the first time.
Time Warner, the world’s largest media company, will retain an 84 percent stake in the cable business, its fastest-growing unit. Time Warner chief executive Richard Parsons is taking the cable division public in a bet that it will help boost Time Warner’s share price. The IPO will also allow the cable business to use its shares to make acquisitions.
“It’s a positive,” said Joe Bonner, an analyst at Argus Research in New York who rates the shares “buy.”
Proceeds will go to Greenwood Village-based Adelphia Communications Corp. creditors, who took 16 percent of the company when Adelphia was bought by Time Warner Cable in July. Under the terms of the acquisition, the creditors agreed to sell at least one-third of their stake.
The cable operations are worth about $43 billion, according to Morgan Stanley. Time Warner said the 16 percent stake was valued at $5.5 billion as of July 31. Stamford, Conn.- based Time Warner Cable won’t receive any proceeds from the IPO.
Adelphia creditors who received shares in Time Warner Cable include William Huff and his W.R. Huff Asset Management Co., Aurelius Capital Management, Catalyst Investment Management and Perry Capital LLC.
