Comcast Corporation (NASDAQ:CMSCA) reportedly entered an agreement to acquire Time Warner Cable Inc (NYSE:TWC) for approximately $45 billion in an all-stock deal, according to reports from The Los Angeles Times based on information from people familiar with the transaction.
According to the report, Comcast Corporation (NASDAQ:CMCSA), the largest cable and internet service provider in the United States, agreed to pay $158.82 per share for Time Warner Cable Inc (NYSE:TWC). The acquisition price represents an 18% premium to the $135.31 per share closing price of the Time Warner Cable’s stock on Wednesday.
Comcast Corporation (NASDAQ:CSCA) offered 2.875 shares of its stock for every shares of Time Warner Cable Inc (NYSE:TWC). The sources said the board of directors of both companies separately approved the agreement. Both companies are expected to officially announce the details of the merger.
The sources also indicated that Rob Marcus, the chief executive officer of Time Warner Cable Inc (NYSE:TWC) will step down from his position after the closing of the transaction.
Charter offered to buy Time Warner Cable
Charter Communications Inc (NASDAQ:CHTR), the smaller cable company backed by John Malone offered to buy Time Warner Cable Inc (NYSE:TWC) for $132.50 per share or $61 billion including debt. Its proposal included cash of $83 per share and $49.50 of the company’s stock. Excluding debt, Charter would have paid approximately $37.3 billion to acquire Time Warner Cable.
Last month, Marcus stated that Charter Communications Inc (NASDAQ:CHTR) is not a good fit for Time Warner Cable Inc (NYSE:TWC) although its merger proposal offers benefits, according to sources.
Cable industry observers believe that a merger between Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc (NYSE:TWC) will likely face strict scrutiny from federal regulators.
Sources said the largest U.S. cable and internet service provider is planning to sell some of its cable systems serving approximately 3 million subscribers to ease regulatory concerns. The sale would make its presence across the country not more than the 30% subscriber limit previously set by the Federal Communications Commission (FCC) on cable operators. In 2009, the U.S. Court of Appeals tossed that rule and cited that there was enough evidence of increasingly competitive communication market place at that time.