The $45 billion deal between Comcast and Time Warner Cable combines the two biggest cable companies in the United States.
The merger will create the dominant provider for television channels and Internet services in the United States.
Comcast is paying Time Warner Cable $158.82 per share. CNN reports that Comcast initially offered to pay $130 per share, but Time Warner Cable wanted to renegotiate.
The merger will generate around $1.5 billion in savings, half of which is expected to be made in the first year of the merger.
There are multiple benefits for Time Warner Cable shareholders because the merger will be tax free to Time Warner shareholders. CNN reports that the merger will also eventually result in higher broadband speeds.
Both companies are expecting to finalize the merger by the end of the year because there are still some concerns about the potential impact on consumers.
CNN reports that Comcast is prepared to divest around three million subscribers, in order to keep its entire cable marketplace ownership under 30 per cent. Comcast still plans on having around 30 million customers.
Comcast’s strategy is to transform the company from a cable television business into a broadband and media powerhouse. CNN reports that CEO Neil Smit is the new leader of the merged company.
