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The must-know basics of the Time Warner Cable–Comcast deal

Brent Nyitray, CFA, MBA

Must-know: Analyzing the Time Warner Cable–Comcast deal (Part 2 of 11)

(Continued from Part 1)

Terms of the deal

Time Warner Cable (T WC ) Shareholders will receive 2.875 Comcast ( CMCSA ) shares for each share of TWC. The transaction is expected to close by the end of the year. Time Warner Cable and Comcast shareholders are expected to receive their respective dividends during the pendency of the deal.

Here’s what you should know about the deal.

Conditions precedent

The deal needs to go through all these steps before it can close:

  • Time Warner Cable Shareholder vote
  • Comcast Shareholder vote
  • Hart-Scott-Rodino Antitrust
  • New York State Public Service Commission
  • Federal Communications Commission approval
  • SEC approval of joint proxy statement


Both companies have a non-solicitation agreement with a fiduciary out. This means if another suitor approaches either party, they can discuss a merger with them if their board of directors thinks there’s a bona fide offer that would likely result in a higher bid for the company.

Breakup fee

In an usual provision, there are no break-up fees in this transaction.

Keep in mind regulatory approvals

The Time Warner–Comcast deal is in a highly regulated industry. These deals typically take a very, very long time. In fact, the companies are expecting a close by the end of the year. And that’s probably an optimistic expectation. A typical utility deal takes 18 months. While this transaction isn’t a utility deal, the regulatory review will be more similar to a utility review than other transactions. You should remember that the process of vetting a transaction takes a while.

Note that the FCC review has a test as to whether the merger is in the public interest. There are other considerations than simply market share working here. The FCC review can take 180 days. To address market power issues, the companies have committed to spin off up to 3 million subscribers into a new company.

Other important mergers

Other important merger spreads you should consider include the Covidien (COV) and Medtronic (MDT) deal as well as the DIRECTV (DTV) and AT&T (T) deal.

Continue to Part 3

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