Comcast Corp said on Thursday it would buy Time Warner Cable Inc for $45.2 billion in an all-stock deal that combines the two largest U.S. cable operators.
The friendly takeover comes as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter Communications Inc, and immediately raised questions as to whether it would pass the scrutiny of anti-trust regulators.
Comcast will pay $158.82 per share, which is roughly what Time Warner Cable demanded from Charter.
The combined company would divest 3 million subscribers, about a quarter of Time Warner's 12 million customers. Together with Comcast's 22 million video subscribers, the roughly 30 million total would represent just under 30 percent of the U.S. pay television video market.
The new cable giant would tower over its closest video competitor, DirecTV, which has about 20 million video customers.
If successful, the deal will be the second time in little more than a year that Comcast has helped reshape the U.S. media landscape after its $17 billion acquisition of NBC Universal was completed in 2013.
The proposed combination, which would give roughly 23 percent of the merged company to Time Warner Cable shareholders, is subject to approval from the U.S. Department of Justice and the Federal Communications Commission. The two companies expect to close the deal, which has no break-up fee, by the end of the year.
The new partners are concentrated in different cities. Comcast would fill in its New Jersey and Connecticut portfolio with Time Warner Cable's New York City customers, for instance, and add major markets such as Los Angeles and Dallas.
"Comcast and Time Warner Cable don't compete and Comcast can easily divest a few million subscribers," said BTIG analyst Rich Greenfield.
While the attempt to merge the two largest U.S. cable operators would face close scrutiny, a divestiture of subscribers should help its case with regulators, he added.
It was not yet clear which markets Comcast would sell.
The companies expect to create $1.5 billion in operating savings, with 50 percent of those savings expected in the first year.
Representatives for the U.S. Federal Communications Commission and the Department of Justice could not be reached for comment.
The proposed deal will be accretive to Comcast, which plans to expand its stock buyback program to $10 billion at the close of the transaction.
Smaller cable operator Charter went hostile this week by nominating a slate of directors to replace the entire board of Time Warner Cable. Charter offered $132.50 per share in a cash and stock deal last month that was rejected as too low.
Talks between Comcast and Time Warner Cable started about a year ago, but negotiations gathered pace in recent weeks, people familiar with the matter said. Time Warner Cable had told Comcast it considered Comcast to be its preferred buyer once Charter had approached them, the sources said.
Source: Reuters
The friendly takeover comes as a surprise after months of public pursuit of Time Warner Cable by smaller rival Charter Communications Inc
Comcast will pay $158.82 per share, which is roughly what Time Warner Cable demanded from Charter.
The combined company would divest 3 million subscribers, about a quarter of Time Warner's 12 million customers. Together with Comcast's 22 million video subscribers, the roughly 30 million total would represent just under 30 percent of the U.S. pay television video market.
The new cable giant would tower over its closest video competitor, DirecTV, which has about 20 million video customers.
If successful, the deal will be the second time in little more than a year that Comcast has helped reshape the U.S. media landscape after its $17 billion acquisition of NBC Universal was completed in 2013.
The proposed combination, which would give roughly 23 percent of the merged company to Time Warner Cable shareholders, is subject to approval from the U.S. Department of Justice and the Federal Communications Commission. The two companies expect to close the deal, which has no break-up fee, by the end of the year.
The new partners are concentrated in different cities. Comcast would fill in its New Jersey and Connecticut portfolio with Time Warner Cable's New York City customers, for instance, and add major markets such as Los Angeles and Dallas.
"Comcast and Time Warner Cable don't compete and Comcast can easily divest a few million subscribers," said BTIG analyst Rich Greenfield.
While the attempt to merge the two largest U.S. cable operators would face close scrutiny, a divestiture of subscribers should help its case with regulators, he added.
It was not yet clear which markets Comcast would sell.
The companies expect to create $1.5 billion in operating savings, with 50 percent of those savings expected in the first year.
Representatives for the U.S. Federal Communications Commission and the Department of Justice could not be reached for comment.
The proposed deal will be accretive to Comcast, which plans to expand its stock buyback program to $10 billion at the close of the transaction.
Smaller cable operator Charter went hostile this week by nominating a slate of directors to replace the entire board of Time Warner Cable. Charter offered $132.50 per share in a cash and stock deal last month that was rejected as too low.
