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TWC: Just The End Or A New Beginning?

23 April 2015 by lberuti

Slightly more than a year ago, CMCSA ( Comcast Corporation ) announced their intention to take over TWC ( Time Warner Cable Inc ) in a $45bln mega deal. This was dealt a first blow last week, as press reports suggested that lawyers at Justice Department’s antitrust division were leaning against the proposed take-over and were preparing to launch a lawsuit to block the transaction. The killer punch might have come today, as the Wall Street Journal reported that the FCC does not think the combination is in the public interest and could recommend a hearing on the case. Many think that would effectively kill the deal, which in turn may result in other M&A transactions unravelling (Charter’s $10.4bln acquisition of Bright House is contingent on the CMCSA/TWC deal going through). Another M&A phase would almost certainly begins, which might see TWC turn from hunted to hunter. On the back of the current uncertainty, TWC’s risk premium doubled in a week, up 70bps to 134bps in hefty volumes (more than $50mln per day).