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Comcast will pay about US$45b in stock for Time Warner Cable
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Comcast Corp has confirmed it agreed to buy Time Warner Cable Inc for about US$45.2 billion in stock, or US$158.82 per share, in a deal that would combine the top two US cable TV companies.
The deal will make Comcast, which also owns the NBCUniversal network, a dominant force in both creating and delivering entertainment to US homes.
The deal was approved by the boards of both companies and, pending regulatory approval, is expected to close by the end of the year.
The price is about 17 percent above Time Warner Cable shares’ Wednesday closing price of US$135.31 and trumps a proposal by Charter Communications Inc to buy Time Warner for about US$132.50 per share, or US$38 billion in cash and stock.
Time Warner Cable shareholders will receive 2.875 Comcast shares for every Time Warner Cable share they own. Once the deal is final, they will end up owning about 23 percent of the combined company.
Charter had pursued Time Warner Cable for months, but Time Warner Cable CEO Rob Marcus had consistently rejected what he called a lowball offer, saying he’d cut a deal for US$160 per share in cash and stock.
For a time, Comcast stayed in the background, waiting to purchase any chunk of subscribers that a combined Charter-Time Warner Cable would sell off. Charter had planned to finance its bid with US$25 billion in new debt.
As part of a plan to pay off the debt quickly, the company considered selling off some of its territories after a deal had closed. Time Warner Cable’s Marcus had also balked at the huge debt burden the Charter takeover represented.
Instead, Comcast now plans to divest 3 million pay TV subscribers after the deal closes. With 22 million of its own pay TV customers and Time Warner Cable’s 11.2 million, the combined entity will end up with about 30 million subscribers when the deal is complete, a level believed not to trigger the concern of antitrust authorities. A formal cap was dissolved years ago by regulators, but divesting subscribers could help the deal get approved more quickly.
Comcast is taking the position that because Comcast and Time Warner Cable don’t serve overlapping markets, their combination won’t reduce competition for consumers.
Comcast operates mainly in the northeast. Time Warner Cable has strongholds around its headquarters in New York as well as Los Angeles, Dallas and Milwaukee.
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