Comcast has agreed today to acquire Time Warner Cable for $45.2 billion ($69 billion including debt) in an all-stock deal. As per the deal, Comcast will pay $158.82 per share for TWC's 277.9 million outstanding shares, which is about $23 per share higher than TWC's Wednesday closing price of $135.31.
Comcast will acquire Time Warner Cable's approximately 11 million managed subscribers, while TWC investors will receive 2.875 Comcast stock for each of their shares.
Comcast already has a large business footprint in major US markets including Denver, Chicago, Detroit, Boston, and more. The deal will add several other major markets like New York and Los Angeles to its footprint. The company will now cover 33 million customers across the nation, which is 33 percent of all US pay TV homes, up 12 percent from its previous total of 21 percent.
"Rob Marcus and his team have created a pure-play cable company that, combined with Comcast, has the foundation for future growth," Brian L. Roberts, chairman and CEO of Comcast, said in a statement.
The deal proposes a challenge to regulators in Washington. According to equities analyst Paul Gallant, who is associated with Guggenheim Securities, since both companies do not compete directly anywhere, the Department of Justice (DOJ), which is usually responsible for antitrust reviews, probably won't question the deal.
But because the deal involves the No.1 cable TV and internet provider gobbling up the No.2 provider, it is likely to come under the scrutiny of the Federal Communications Commission (FCC), as it could affect public interest. Meanwhile, Comcast said that the company is willing to divest 3 million subscribers to satisfy any regularity issues.
The news came less than a month after Time Warner Cable rejected Charter Communications' $132.50-a-share bid, terming it as a "low-ball offer".