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SEC Filings

PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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In this analysis, the TWC financial advisors reviewed transaction values (calculated as the enterprise value implied for the target company based on the consideration payable in the selected transactions) as a multiple of the target company’s one-year forward estimated EBITDA both with and without taking into account tax attributes other than step-ups in asset tax bases. The overall low to high one-year forward estimated EBITDA multiples observed for the target companies were 7.1x to 9.2x adjusted for tax attributes and 7.1x to 9.6x (with a mean of 8.2x) not adjusted for tax attributes. The TWC financial advisors then applied selected ranges of one-year forward estimated EBITDA multiples of 7.75x to 8.5x adjusted for tax attributes and 8.0x to 9.0x not adjusted for tax attributes derived from the selected transactions to corresponding data of TWC. Financial data of the selected transactions were based on Wall Street research consensus estimates, public filings and other publicly available information. Financial data of TWC was based on the TWC forecasts.

This analysis indicated the following approximate implied per share equity value reference ranges for TWC common stock both adjusted and not adjusted for tax attributes as compared to the implied merger consideration:

 

Implied Per Share

Equity Value Reference Ranges for TWC

  

Implied Merger
Consideration

Adjusted for
Tax Attributes

  

Not Adjusted for
Tax Attributes

  
$157 – $179    $158 – $187    $194.84

The TWC financial advisors noted that applying the one-year forward estimated EBITDA multiple observed for the Altice S.A./Suddenlink Communications transaction to corresponding financial data of TWC would indicate an approximate implied per share equity value for TWC common stock of $199 per share adjusted for tax attributes and $204 per share not adjusted for tax attributes.

No company, business or transaction used in this analysis is identical to TWC or the transaction and, accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics that could affect the acquisition or other values of the companies, businesses or transactions to which TWC and the transaction were compared.

Discounted Cash Flow Analysis

Allen & Company, Citi and Morgan Stanley performed a discounted cash flow analysis of TWC in which such TWC financial advisors calculated the estimated present value of the standalone unlevered after-tax free cash flows that TWC was forecasted to generate during the nine-month period ending December 31, 2015 through the full calendar year ending December 31, 2024. Financial data of TWC was based on the TWC forecasts. For purposes of this analysis, stock-based compensation was treated as a cash expense. The terminal value of TWC at the end of the forecast period was estimated by using perpetuity growth rates ranging from 1.0% to 1.5%. The cash flows and terminal values were then discounted to present value (as of March 31, 2015) using discount rates ranging from 6.25% to 7.25%. This analysis indicated the following approximate implied per share equity value reference range for TWC common stock as compared to the implied merger consideration:

 

TWC Implied Per Share Equity

Value Reference Range

  

Implied Merger Consideration

$133 – $188    $194.84

Charter Financial Analyses

Selected Public Companies Analysis

Allen & Company, Citi and Morgan Stanley performed a selected public companies analysis of Charter in which such TWC financial advisors reviewed certain financial and stock market information relating to Charter

 

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