According to four people with knowledge of the matter, Comcast Corp. has reached an agreement to purchase Time Warner Cable Inc. in a deal estimated to about 44 billion dollars. Such a move is considered to unite the two largest cable companies in the U.S. in an all-stock deal.
The people, who asked not to be identified, because the talks are not public, reported that Comcast Corp. is going to pay about 159 dollars a share. If the numbers are right, this is about 18% more than the last close of Time Warner Cable. As reported by Bloomberg, the company rose 16% to 157.09 dollars in European trading, and Comcast Corp. decreased by 2.8%.
Brian Roberts, who is the Chief Executive Officer of Comcast Corp., is said to continue his lead in the U.S cable-TV market after overwhelmingly defeating Charter Communications Inc., which is headed by John Malone. The latter has been wooing Time Warner Cable since June 2013.
One of the analysts working for BTIG LLC – Richard Greenfield said in an e-mailed statement cited by Bloomberg: “This leaves Comcast as the sole king of the cable hill, with John Malone and Charter hitting a brick wall in their hopes of becoming a close number-two. This is a game changer for Comcast.”
One of the people familiar with the matter explained that it is not likely for Charter to match the bid of Comcast. In addition, it is also interested in finding out what assets would be sold by Comcast. Another person reported that the latter would willingly dispose of about 3 million subscribers of the combined company in order to maintain its market share lower than 30%. As reported by Bloomberg, one of the people with knowledge of this process said that Charter may still have a chance to make a final offer in case the agreement with Comcast requires Time Warner Cable to pay a breakup fee.
Charter explained in an official statement, which was cited by Bloomberg: “Charter has always maintained that our greatest opportunity to create value for our shareholders is by executing our current business plan, and that we will continue to be disciplined in this and any other M&A activity we pursue.”
Comcasts spokeswoman DArcy Rudnay refused to make any comments on the situation. The spokesman of Time Warner Cable – Bobby Amirshahi did not respond immediately to the requests to comment on the rumours.
Comcast Corp.s shares rose by 0.44% on Wednesday to settle at $55.24, marking a one-year change of +41.75%. According to CNN Money, the 29 analysts offering 12-month price forecasts for Comcast Corp. have a median target of $60.00, with a high estimate of $65.00 and a low estimate of $47.00. The median estimate represents a +8.62% increase from the last close.
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