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Wednesday, April 14, 2021

Comcast Agrees to $45B Time Warner Cable Takeover

Comcast has agreed to buy Time Warner Cable for $158.82 per share, valuing the deal at about $45 billion. The acquisition, if approved by regulators, will merge the country’s No. 1 and No. 2 cable MSOs, with 23 and 11 million subscribers, respectively.

The combination would create a broadband and pay-TV company of unprecedented scale: At 34 million customers, together they would reach about one in three American households.

Comcast said it was prepared to divest about 3 million subscribers to appease regulators.

The deal comes after No. 4 cableco Charter Communications made an official offer to buy TWC for $132.50 per share earlier in the year in a highly leveraged transaction, which would have created a triple-play provider serving 20 million customers in 38 states. TWC rejected the offer out of hand as “grossly inadequate,” with CEO Rob Marcus countering that he would not take an offer less than $160 per share, $100 of it in cash. That kicked off a war of words, with Charter CEO Tom Rutledge calling out TWC’s “failed operational strategy” and ongoing quarterly video subscriber losses.

It also has pursued a hostile takeover strategy, and earlier this week announced 13 nominations to the TWC board, which is up for re-election in its entirety at the annual shareholders’ meeting. It was hoping that the shareholders themselves would agree to a Charter takeover, vote its nominees in and thus seal TWC’s fate. That prompted Marcus to accuse Charter of trying to “steal” the company.

Clearly, Charter’s move lit a fire under Comcast, who has been reportedly in talks with TWC for months. Marcus has made it clear that the much larger and healthy Comcast would be a welcome suitor, bringing both cash and technology innovation to the table.

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