(AP--) Comcast Corp. will buy Time Warner Cable Inc. for about $45.2 billion in a deal that combines the nation's top two cable TV companies and would create a dominant force in both creating and delivering entertainment to U.S. homes. The all-stock deal was approved by the boards of both companies. It is expected to close by the end of the year, pending shareholder and regulatory approvals.
The price amounts to $158.82 per share for Time Warner Cable's roughly 285 million outstanding shares and is about 17 percent above that stock's Wednesday closing price of $135.31. It trumps a proposal by Charter Communications Inc. to buy Time Warner Cable for about $132.50 per share, or $38 billion in cash and stock.
Time Warner Cable shareholders will receive 2.875 Comcast shares for every Time Warner Cable share they own. Once the deal is final, they will end up owning about 23 percent of the combined company.
Charter had pursued Time Warner Cable for months, but Time Warner Cable CEO Rob Marcus had consistently rejected what he called a lowball offer, saying he'd cut a deal for $160 per share in cash and stock.Comcast now plans to divest 3 million pay TV subscribers after the deal closes. With 22 million of its own pay TV customers and Time Warner Cable's 11.2 million, the combined entity will end up with about 30 million subscribers, a level believed not to trigger the concern of antitrust authorities. A formal cap was dissolved years ago by regulators, but divesting subscribers could help the deal get approved more quickly.
Comcast and Time Warner Cable are expected to save $1.5 billion in annual costs over three years, with half of that realized in the first year.
Comcast also plans to add an additional $10 billion in share buybacks at the close of the deal, on top of a recent plan to boost its share buyback authority to $7.5 billion from $1 billion.