Comcast Corporation today secured a deal worth $45.2 billion for the acquisition of Time Warner Cable Inc. The all stock agreement combines the two biggest cable companies in the United States. Time Warner shareholders will receive 2.875 Comcast shares for each stock they own, subject to regulatory approval. This equates to a share valuation of $158.82 per Time Warner share, an increase of 17% on its closing price in Wednesday trading.
Time Warner had been fending off an increasingly hostile takeover bid from rival cable provider, Charter Communications Inc, in recent months. Time Warner publicly branded Charter’s January proposition of $130 per share as ‘grossly inadequate’, indicating that a fairer valuation lay closer to $160 per share. Today’s Comcast offer falls just shy of that January valuation.
Investors on Wall Street responded to the news by loading up on Time Warner Cable’s stock. Shares rose 7.02% for the day on the New York Stock Exchange to close out at $144.81. Suggestions that Comcast may have paid over the odds were amplified however, in its shares’ poor trading performance this afternoon. Prices fell over 4% to finish the day at just under $53 per share. Charter still proved the big loser of the day though, with shares plunging 6.34%. Investors perceived the firm’s lockout from the deal as detrimental, instigating the imminent fallout.
Regulatory approval is yet to be attained in order to finalise the deal; Comcast have set a year-end target for its completion. Potential hurdles to approval include disgruntled consumers’ opposition to hikes in already sky high cable prices, and a market tending towards monopoly. It remains to be seen how regulators will view proceedings. Comcast CEO Brian Roberts, who will head the merged firm, described the development as ‘"an exciting opportunity for our company, for our customers, and for our shareholders."