Key Highlights

  • Cable One extended the deadline to buy the rest of Mega Broadband Investments to Oct. 9 from Oct. 1.
  • The company said financing talks with some potential investors had ended, with no definitive agreements reached.
  • Rising Treasury yields are making financing conditions tougher for companies seeking to fund acquisitions.
  • Small caps broadly lagged the market's larger gainers the same session.

Cable One shares slid on Monday, Oct. 5, after the broadband provider pushed back the deadline on a planned purchase and said some financing talks with potential investors had ended.

A Deadline Pushed Back

Cable One (NYSE:CABO) fell sharply on the S&P SmallCap 600 on Monday after extending the deadline to buy the rest of Mega Broadband Investments Holdings. The company moved the date to Oct. 9 from Oct. 1, while it continues financing discussions.

The deal involves the remaining stake in Mega Broadband Investments that Cable One does not already own, which it is set to buy from Private Equity firm GTCR.

The shares slid as investors weighed the update. Cable One also disclosed that some of its conversations with possible investors had come to an end.

What the Company Said

In its update, Cable One said financing discussions and confidentiality arrangements with certain other potential investors had ended. It also said no definitive agreements have been reached.

Those two statements were at the center of Monday's move. They indicate that the financing for the purchase is still being worked out, and that some potential participants are no longer in talks.

How the situation is resolved is not yet known. The company has set a new deadline, and further updates may come before or at that date.

A Tough Backdrop for Borrowers

Financing conditions are a key part of the story. Treasury yields rose again on Monday, with the 10-year yield climbing to its highest level since 2002. Higher long-term rates raise borrowing costs for companies seeking to fund acquisitions.

The yield climb came even after a weak September jobs report showed payrolls rising by only 29,000. That soft data cut bets on another Fed rate hike in October to roughly one in four or less. But the ISM services survey showed prices paid at their highest since July 2022, keeping Inflation worries alive. Heavy federal borrowing and a Global Bond selloff, led by France's fiscal troubles, also kept pressure on yields.

One rates strategist said that, all else being equal, investors were content with the underlying performance of the real economy and shared the Fed's inflation angst.

Small Caps Trail the Leaders

Cable One's slide came as small caps lagged. The Russell 2000 rose 14.24 points to 2,847.14, while the Nasdaq Composite climbed 286.45 points to a record 27,477.31 and the Nasdaq-100 closed at a record 31,076.44. The S&P 500 gained 51.23 points to 7,773.95, just shy of its record, and the Dow added 90.94 points to 51,267.90.

Gains were led by mega-cap AI stocks such as Nvidia (NASDAQ:NVDA), which closed at a record. New lows on the Nasdaq far outnumbered new highs, a sign of uneven participation.

Deal news was plentiful elsewhere. Schneider Electric (OTC:SBGSY) agreed to buy PTC (NASDAQ:PTC) for $205 a share in cash, and C.H. Robinson Worldwide (NASDAQ:CHRW) agreed to buy RXO (NYSE:RXO) in a deal valued at about $5.8 billion. Optimum Communications (NYSE:OPTU), formerly Altice USA, rose after announcing network upgrades in Lake Charles, Louisiana.

What to Watch Next

The next date for Cable One is the new Oct. 9 deadline for the Mega Broadband purchase. Investors will watch for any update on financing arrangements or definitive agreements before or at that point.

On the macro side, the Fed releases minutes of its September meeting on Wednesday, Oct. 7, at 2 p.m. ET. For Cable One, though, the Oct. 9 deadline it just set for itself is the date investors will actually be watching.