Time Warner Cable has been bought by Comcast, merging the top two cable-TV companies in the United States. Photo: AP

New York - Comcast has agreed to buy Time Warner Cable for $45.2 billion (R496bn), combining the two largest US cable companies in an all-stock transaction.

Investors of New York-based Time Warner Cable would get 2 875 new Comcast stock for each of their shares, the companies said in a joint statement yesterday. Based on Comcast’s closing price on Wednesday, the deal values each Time Warner Cable share at $158.82, or about 17 percent more than last close.

In German trading, Time Warner Cable leapt 13 percent to the equivalent of $153.29 at 12.12pm in Frankfurt.

Comcast chief Brian Roberts will extend his lead in the US cable-TV market after trouncing Charter Communications, which courted Time Warner Cable from June last year. Holding out for a better offer than Charter’s $132.50-a-share bid allowed Time Warner Cable to deliver almost 70 percent gains for shareholders since the end of May.

Time Warner Cable advanced 0.3 percent yesterday to close at $135.31 in New York. The company has 277.9 million shares outstanding, giving it a market value of $37.6 billion, data compiled by Bloomberg show. Comcast added 0.4 percent to $55.24.

Charter was unlikely to match Comcast’s bid and was willing to study any assets Comcast would sell, said a person familiar with the matter, who asked not to be identified because the negotiations were private. Comcast will volunteer to divest about 3 million subscribers of the combined firm to keep its market share below 30 percent and is willing to sell them to Charter, another person said.

Buying the second-largest US cable-TV company brings Comcast more than 11 million residential subscribers. It also gave it access to the New York City cable market and brought more bargaining power with content providers, said Bill Smead, the chief investment officer at Smead Capital Management. “This is definitely a bet on a positive future for high-speed access, cable and other services in economic recovery.”

A tie-up between the firms would face scrutiny from the Federal Communications Commission, Craig Moffett at Moffett Nathanson said.

The merged firm would account for almost three-quarters of the cable industry, according to the National Cable Television Association. - Bloomberg