Mergers and acquisitions

: the case of Comcast and Time Warner Cable

Abstract

Comcast and Time Warner Cable (TWC) merger has been a daily headline in the US business press since the merger announcement in last February 13th of 2014. Meanwhile many questions are raised about the transaction, either in terms of legal issues or in terms related to the strategy fit and financial accretive. These questions are motivated due to the size of both companies in industry where they operate, that leads to witness the largest merger in such industry and the emergence of a potential monopoly. Nevertheless, the constant increasing of the competition in communication, entertainment and media sector and technology, forces the companies to act strategically in order for them not to be behind the market trends as well as the US economy growth. In the meantime, the most common strategy found by companies to take advantage from the opportunities and threats that come from those factors is the merger approach. This dissertation stresses the value created through the combination of both Comcast and Time Warner Cable using the firm valuation tools and regards M&A concepts. Thus, with regards to those tools and the companies’ information, the conclusions indicated an unevaluated TWC’s closing share price before the merger announcement. Additionally, the acquisition of TWC creates 6% of synergies for TWC shareholders and 3% of synergies for Comcast shareholders at a SVAR of 2%. In turn, an offer at 6% premium over TWC’s market capitalization (February 12th) will be proposed with 100% in stock-for-stock.

Date of Award	2015
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Peter Tsvetkov (Supervisor)