As anticipated, Comcast agreed on Thursday to acquire smaller rival Time Warner Cable (TWC) in an all-stock deal worth $45.2 billion.
The transaction will result in TWC owning 23% of Comcast's common stock, with a value to TWC shareholders of $158.8 per share.
To ease competition concerns, Comcast has pledged to divest 3 million subscribers; nonetheless, the acquisition creates a clear leader in the U.S. pay TV market with more than 30 million customers to second-placed DirecTV's 20 million.
"The combination of Time Warner Cable and Comcast creates an exciting opportunity for our company, for our customers, and for our shareholders," said Comcast CEO Brian Roberts, in a statement. "This transaction will be accretive and will yield many synergies and benefits in the years ahead."
Indeed, TWC owns cable systems in key geographic areas, including New York City, Southern California, Texas, the Carolinas, Ohio, and Wisconsin. In addition, Comcast expects the deal to generate approximately $1.5 billion in operating efficiencies.
The merged entity will be led by Comcast Cable CEO Neil Smit. The companies expect the deal to close by the end of 2014, subject to shareholder and regulatory approval.
At $158.8 per TWC share, Comcast's offer price easily trumps that of rival cable provider Charter Communications' offer of $132.50. In January, TWC called the latter's bid "grossly inadequate", which this week prompted Charter – convinced it had the backing of TWC shareholders – to propose replacing TWC's entire board with representatives who would green-light its offer.
Sources cited by Reuters claimed that Comcast was in talks with Charter about carving up TWC's markets between them, but opted instead to bid separately once Charter's offer turned hostile.