Comcast outmanoeuvres Charter with USD45bn deal for Time Warner Cable

13 Feb 2014

US cable giant Comcast has agreed to buy Time Warner Cable (TWC) for USD45.2 billion in an all-stock transaction, Reuters reports, in a deal that will combine the nation’s two largest cable broadband operators. The ‘friendly’ takeover comes as something of a surprise, and follows several months of ‘hostile’ public pursuit of TWC by smaller rival Charter Communications. Comcast will pay USD158.82 per share, more than the USD142.5 per share that TWC demanded from Charter; the latter had offered USD132.5 per share, in an offer branded ‘grossly inadequate’ by TWC last month. The proposed combination will give roughly 23% of the merged company to TWC shareholders. The deal is expected to be formally announced later today.

As part of the deal, the combined company intends to divest around three million subscribers, around a quarter of Time Warner’s current user base. Although it is not yet clear which markets Comcast intends to sell, the carve-up is likely to pique the interest of spurned suitor Charter. According to TeleGeography’s GlobalComms Database, following preliminary merger talks by the trio in 4Q13, it was suggested that Comcast could expand its existing cable system clusters in Florida, New York and Texas, while Charter could create efficiencies in terms of marketing, sales and operations in areas where it operates near TWC systems – including Los Angeles and the Carolinas.