In a blockbuster deal that will combine the U.S.' two largest cable companies, Comcast Thursday revealed plans to acquire Time Warner Cable for $45.2 billion.
The deal, which already is approved by both companies' boards, is an all-stock transaction in which Comcast will acquire all of Time Warner Cable's 284.9 million shares in exchange for Comcast stock, worth about $45.2 billion in equity value. Time Warner Cable shareholders will own about 23 percent of Comcast’s common stock, the companies said.
Through the merger, Comcast will acquire Time Warner Cable's roughly 11 million U.S. subscribers, bringing the combined company's total subscriber base to about 30 million. Comcast, however, said it's prepared to divest approximately 3 million Time Warner Cable subscribers in an effort to fight off regulatory concerns and keep its market share below 30 percent.
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The combined company will be run by Comcast Cable CEO and President Neil Smit.
According to both companies, the deal, which is set to close by the end of the year, will allow Time Warner Cable and Comcast to combine their portfolios to create what they said would be higher broadband speeds, faster Wi-Fi, and other new consumer and business offerings.
"This combination creates a company that delivers maximum value for our shareholders, enormous opportunities for our employees and a superior experience for our customers," said Robert D. Marcus, chairman and CEO of Time Warner Cable, in a statement. "Comcast and Time Warner Cable have been the leaders in all of the industry's most important innovations of the last 25 years and this merger will accelerate the pace of that innovation."
According to Steve Hilton, managing director at research group MachNation, the Comcast-Time Warner Cable deal is a good move for both companies' channels.
"Under the development of [Senior Vice President, New Business Solutions at Comcast Business Services] Kevin O'Toole's product team, Comcast has focused on cloud services with its Upware solution and various hosted voice/data solutions," Hilton wrote Thursday. "[Time Warner Cable] has a strong portfolio of metro Ethernet connectivity-based solutions for businesses. Put the two product portfolios together and you get a strong, viable business services entity."
Comcast's acquisition of Time Warner Cable comes after months of smaller U.S. cable company Charter Communications staging its own takeover bid for Time Warner Cable. According to a report from Bloomberg, citing sources familiar with the matter, Charter is unlikely to match Comcast's bid, but is considering a buy of any Comcast assets sold in the deal, such as the 3 million subscribers Comcast said it plans to divest.
PUBLISHED FEB. 13, 2014