In a deal that would bring together the third and fourth largest cable providers in the U.S. to create a broadband delivery giant, Comcast said today that it will acquire MediaOne in a stock swap valued at $60 billion.
The combined Comcast/MediaOne entity will serve 11 million cable customers, with its network passing over 18 million homes, the companies said in a statement. As one organization, Comcast/MediaOne hopes to capitalize on the growing demand for interactive, broadband content delivery, such as cable Internet access and cable-based telephony.
Under the terms of the agreement, MediaOne shareholders will receive 1.1 shares of Comcast common stock for each MediaOne share, or $80.16 per share based on Comcast's closing price of $72.875 on Friday, March 19. The deal represents a 32% premium over MediaOne's closing price on the same day of $60.75. The boards of directors of both companies have already approved the transaction, but the deal still has to obtain shareholder and regulatory approval. Comcast and MediaOne expect the deal to be complete by year-end.
Together, the companies have a market capitalization of $97 billion.
Comcast/MediaOne plans to offer broadband Internet access, television programming and cable-based telephony services. Customers will benefit from the merger through the offering of more advanced, bundled cable services, they said. While the majority of services will be offered in the U.S., MediaOne also offers broadband Internet services in Asia and Europe.
Ralph Roberts, president of Comcast, will become chairman of the new company. Meanwhile, Charles Lillis, president, CEO and chairman of MediaOne, will become the new company's president.
Cable companies have been in the limelight recently. This attention is because more communications and content providers seek to cement their foothold in the broadband services market by acquiring or investing in cable operators. AT&T completed a $55 billion acquisition of Tele-Communications earlier this month in a move to provide local telephony and cable Internet access.
