Comcast Corporation (NASDAQ:CMCSA) is set to acquire Time Warner Cable Inc (NYSE:TWC) for $45 billion in stock that would amalgamate the two biggest cable operators of the nation, says a report from the Wall Street Journal, according to sources familiar with the situation. Board member of both the companies has approved the deal, which would be announced by Thursday Morning.
Deal ends a long battle
Comcast Corporation (NASDAQ:CMCSA) is finally able to take over Time Warner Cable leaving behind cable operator Charter Communications Inc and its biggest shareholders, Liberty Media Corp, headed by cable pioneer John Malone. Comcast Chief Executive Brian Roberts has dominated the cable space and proved it further with this transaction. However, the transaction will be subjected to intensive regulatory review.
Charter took an interest in TWC after Liberty bought a 27% stake in Charter a year ago. At that time, experts believed that Mr. Malone may emerge as a rival to Mr. Roberts. Malone has dominated the US cable industry, but sold his previous cable firm, Telecommunication Inc, in 1999.
As per the deal, Time Warner Cable shareholders will get $158.82 per share in the stock for their shares, which is more than $23 per share from the current trading price. Among three offers from Charter, the latest one was valued at $132.50, but was rejected by TWC for being too low. Chief Executive of Time Warner Cable, Rob Marcus said that TWC is demanding$160 per share.
Few days back, Charter exerted pressure on TWC by appointing a group of 13 people as a candidate for TWC’s board before the annual meeting.
TWC always preferred Comcast
TWC has for long been considering Comcast Corporation (NASDAQ:CMCSA) as an appropriate merger partner. Last year, the company approached Comcast for a potential deal, but until last week there was no hint that Comcast would enter into a deal. However, last week on Tuesday, Comcast and Time Warner Cable held talks where executives discussed a possible deal. Sources said that Comcast did not like the alternative fight initiated by Charter. On the other hand, TWC was not satisfied with the amount of debt that Charter bumped into the company. A merger with Comcast would help TWC to witness more conservative leverage ratios than under Charter.
On Wednesday evening, TWC board held a meeting around 5p.m. and simultaneously Comcast’s board also held a meeting. Around 8p.m. board of directors from both the company approved the deal.