Step Aside, Level 3: Comcast, Time Warner Cable Now Seen as tw telecom Suitors

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Just one week after a key tw telecom investor speculated that the company would provide “massive value” for Level 3 Communications if the multinational telecommunications and Internet service provider were to buy it, here comes a new report linking cable giants Comcast and Time Warner Cable to Denver-based tw.

Financial-services company D.A. Davidson said this week that America’s two largest cable companies make more sense as buyers for tw telecom. Another tw telecom shareholder, Thrivent Financial for Lutherans, mentioned CenturyLink as a good bet to buy the company, Bloomberg BusinessWeek reported.

This all got started last week, when Keith Meister, founder of Corvex a key tw telecom shareholder said that he sees Level 3 being a great suitor for the Denver-based company. Corvex owns a shares of both companies.

Level 3’s name comes up regularly when there is major M&A speculation, but many analysts have said it wouldn’t be a good move for the company due to its debt and slow integration of Global Crossing, which it acquired in 2011.

The importance of having an asset like tw telecom within your company is going to become increasingly important, and, at some point, that makes the valuation argument a little bit easier to overcome,” Cowen analyst Colby Synesael told Bloomberg, which says the provider of business-class managed voice, Internet and data network services has “the highest enterprise value relative to free cash flow among U.S. telecom carriers” $1 billion.

It’s estimated that tw telecom is worth $4.3 billion.

All of this has done wonders for tw’s stock price. It hit an 11-year high after the Corvex speculation last week, and is up another 1 percent as of 1:30 p.m. ET, to another record high.

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