A Bloomberg report said a shareholder of Time Warner Cable Inc filed a lawsuit to block the firm's $45.2 billion takeover deal with Comcast Corp. In the lawsuit, the shareholder said that the consolidation of the two biggest cable television companies in the US is set to encounter high regulatory hurdles and that the merger was a result of unfair dealing.
Investor Breffni Barrett said in a complaint filed in the New York State Supreme Court in Manhattan today that the lawsuit's ultimate goal was to impede the sale of the company at an unfair price through a self-serving process to Comcast. Bloomberg said that Barrett is seeking to sue on behalf of his fellow shareholders.
MoffettNathanson LLC analyst Craig Moffett seconded Barrett's concerns about the extreme scrutiny both Philadelphia-based Comcast and New York-based Time Warner Cable will be subject to on the road of merging both companies to one. National Cable Television Association data have showed that the merger will have the new company securing almost 75% market share of the cable industry. Barrett claimed that the deal could bring the number of Comcast's subscriber base to around 30 million.
Barrett also stated in the lawsuit that the management of Time Warner Cable would stand to receive immediate benefits upon the finalization of the merger, which include over $60 million in special payments.
In the complaint, Barrett stated, "Since rumors first leaked in mid-2013 about several companies interested in acquiring Time Warner, it has been reported that Time Warner failed to engage in good faith negotiations. Given Comcast's dominance in the cable industry, Time Warner's merger with Comcast raises antitrust issues that another potential acquirer, like Charter for example, may not have faced."
Investors of Time Warner Cable are expected to receive 2.875 in Comcast stock per share, the companies said in a joint bid yesterday. The deal is said to have been approved by both regulators and stockholders, and would be finalized before the year ends.
