Comcast has confirmed it has struck a deal to buy rival Time Warner Cable (TWC) in a deal worth US$45.2 billion (€39.8 billion) that will bring together the two largest players in the US cable market by subscribers.
The all-stock deal, which was agreed last night and was announced formally today, will see Comcast pay US$159 per-share for TWC – an approximate 17% premium over TWC’s closing share price Wednesday of US$135.
The combined company is expected to account for roughly 30 million subscribers, accounting for just under 30% of the total pay TV market in the US.
The combined entity will be led by Neil Smit, currently Comcast Cable CEO and president.
Time Warner has roughly 12 million customers currently, and Comcast 22 million. The merged company is expected to divest roughly three million subscribers, a move that could help win the support of regulators.
Comcast said that this market should would be equivalent to its share after the 2002 acquisition of AT&T Broadband and the 2006 acquisition of Adelphia.
News of agreement follows reports that third biggest US cable company Charter Communications had pursued TWC for months, and had unsuccessfully offered US$38 billion in cash and stock to buy the firm.
The deal, which will need to pass US regulatory approval, is expected to close by the end of the year.
“The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers, and for our shareholders,” said Brian Roberts, Chairman and CEO, Comcast Corporation. “In addition to creating a world-class company, this is a compelling financial and strategic transaction for our shareholders. Also, it is our intention to expand our buyback program by an additional US$10 billion at the close of the transaction. We believe there are meaningful operational efficiencies and the adjusted purchase multiple is approximately 6.7x Operating Cash Flow. This transaction will be accretive and will yield many synergies and benefits in the years ahead.”
Roberts said he was “looking forward to working with [Robert Marcus’s] team as we bring our companies together to deliver the most innovative products and services and a superior customer experience within the highly competitive and dynamic marketplace in which we operate”.
“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 Marcus, chairman and CEO of Time Warner Cable. “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. Brian Roberts, Neil Smit, Michael Angelakis and the Comcast management team have built an industry-leading platform and innovative products and services, and we’re excited to be part of delivering all of the possibilities of cable’s superior broadband networks to more American consumers.”
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