Cable TV operator Charter Communications Inc. is preparing to send a letter offering to buy the much larger Time Warner Cable Inc. for below $135 per share as early as Monday.
That's according to a person familiar with the matter, who was unauthorized to speak publicly and spoke on condition of anonymity.
The news was reported earlier by The New York Times' DealBook blog.
The offer would value Time Warner Cable at up to $38 billion, and represents a small premium to the New York company's closing price of $131.41, up 35 cents, on Friday. But shares have risen from the mid-$90s in June, largely on takeover speculation.
The person said the offer would be in cash and stock and that Charter has lined up $25 billion in debt to help finance the deal.
Whether or not the offer is made publicly available would depend on Time Warner Cable's reaction to the offer, the person said.
A Time Warner Cable spokesman declined to comment.
Consolidation talk has percolated throughout the cable TV world ever since billionaire John Malone's Liberty Media Corp. took a 27 percent stake in Charter for $2.6 billion in May. TV distributors are seen banding together to gain more leverage at the bargaining table against media companies that are driving up fees for their TV networks.
Time Warner Cable in particular suffered from a bruising month long blackout in a fee dispute with CBS Corp. in August, losing more than 300,000 video subscribers in the third quarter.