Following rumors from just a few months ago that Softbank was interested in acquiring the U.S. second-largest cable provider – Charter Communications – the company has reportedly been buying up stock in the company. In fact, over the past several weeks, Softbank’s CEO, Masayoshi Son, has apparently bought up as much as 5-percent of Charter Communications’ stock. The move is speculated to be a starting point for a takeover of the cable company by the U.S mobile provider and subsidiary of Softbank, Sprint. It’s estimated that such a deal would tally in at around $100 billion but it isn’t immediately clear what the motive is here. Softbank could be trying to gain enough share to ultimately take over or the company could simply want to invest. Either case is plausible since any buyout has been staunchly spoken out against by upper management at Charter Communications but lauded by prominent shareholders.
The prior rumors resulted in sizeable stock increases for Charter, so it also isn’t clear why it would resist a deal between the two companies. That shows a general interest in the amount of value each company could bring to the other. In the meantime, it is entirely possible that Charter’s outspokenness on the issue stems from a contract signed between the company and Comcast, which prevents either from signing a new deal with a wireless provider until May. So, even if the company were interested, it wouldn’t be able to do anything about it until then.
In the meantime, even if Sprint’s parent company has no interest in moving forward to make a formal bid for an acquisition or merger, the stock purchase still makes sense. Charter is a relatively successful organization that serves as a good investment for Sprint in the long term. Moreover, buying so much stock could give the company a stronger leg to stand on if talks to move to include an acquisition or merger. Unfortunately, neither Sprint or Charter has released any new public statements following the purchase of the stocks. Since there’s no guarantee a buyout is a Softbank goal, at this point, it may be best to treat the news with a degree of skepticism.