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Memo To Blogger Ben—–The TWC/Charter Deal Is A “Bubble” Staring You In The Face
davidstockmanscontracorner.com / by David Stockman •
It’s Merger Monday again on this holiday adjusted Tuesday. So the announcement of another humongous debt-fueled M&A deal is right on schedule.
This time it involves the utterly pointless combination of two giant, quasi-monopoly cable companies—–Time-Warner Cable (TWC) and Charter (CHTR)—– that are already on their homeward journey to Joseph Schumpeter’s Walhalla of creative destruction. But not before da boyz in the casino have one last go at a positively lunatic speculation.
To wit, during the last 12 months, TWC and Charter have managed to generate a combined total of $4.6 billion in free cash flow (i.e. EBITDA less CapEx). At the moment the market is valuing their combined TEV at $116 billion. That computes to a free cash flow multiple of 25X!
But that’s not evidence of a bubble. No sir. Over the weekend Blogger Ben assured the world that the financial markets are neither exuberant nor irrational:
BERNANKE: NO LARGE MISPRICINGS IN U.S. SECURITIES, ASSET PRICES
That’s right, the TEV of Charter is $41 billion and today the market is valuing the take-out of TWC at $75 billion. Blogger Ben, do you really think that $4.6 billion of free cash flow in the dying cable industry is worth $116 billion?
The post Memo To Blogger Ben—–The TWC/Charter Deal Is A “Bubble” Staring You In The Face appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/05/26/memo-to-blogger-ben-the-twccharter-deal-is-a-bubble-staring-you-in-the-face/
