On the 26th of May, news reported that Time Warner Cable will be bought by Charter Communications for $55bn or $195 a share. After the drop out of Comcast from the acquisition, Time Warner Cable have been approached by Charter Communications, which is the third largest cable television provider. The deal shows how consolidation is becoming increasingly important in the Media Industry. The new giant will have to pass by the difficult waters of regulators, which have previously led the Comcast-TWC deal to a stalemate, and further to the drop out of Comcast. TWC’s share soared after the news considering the premium Charter is willing to pay to seal the deal. In Merger Arbitrage, normally the target company’s shares soar following the news, and adjust to the price proposed by the acquiror, while the acquiror’s shares tend to decline.
Nowadays, in TMT, the bigger the better.
By
Tancredi Viale
ESCP Finance Society 