Time Warner and Turner Broadcasting System on the Verge of Multibillion-Dollar Deal

Strategic Insights -

Reports suggest that Time Warner Inc. is expected to reach a final agreement to acquire Turner Broadcasting System (TBS) for $8 billion, with a formal announcement potentially coming as early as Friday pending the approval of both companies' boards. The deal, which has been in talks for several weeks, is said to involve a purchase price of $35 per share for TBS or approximately 0.75 shares of Time Warner for each TBS share.

Key Takeaways:

  • Time Warner is expected to acquire TBS for $8 billion, with a purchase price of $35 per share or approximately 0.75 shares of Time Warner for each TBS share.
  • The deal requires the approval of both Time Warner and TBS boards, with a formal announcement potentially coming as early as Friday.
  • US West Inc. has raised concerns that the deal would violate terms of its 1993 investment in Time Warner's entertainment operations, potentially stalling the agreement.
  • Time Warner has reportedly considered retaliating against US West with a legal attack on its regulatory compliance.
  • Tele-Communications Inc. (TCI) would receive a premium for its 21% stake in TBS, setting its price at approximately $35 per share or 0.75 shares of Time Warner for each TBS share.
  • TCI head John Malone has made several demands as a condition for endorsing the deal, including an increase in Time Warner's anti-takeover 'poison pill' threshold from 15% to 18%.
  • Turner would own 10% of the new Time Warner company if the deal goes through.

Statistics:

  • $8 billion: The estimated value of the Time Warner-TBS deal.
  • $35 per share: The reported purchase price of TBS per share.
  • 0.75 shares: The estimated number of Time Warner shares that each TBS share would be exchanged for.
  • 21%: The percentage of TBS shares owned by Tele-Communications Inc. (TCI).
  • 15%: The current threshold for Time Warner's anti-takeover 'poison pill'.
  • 18%: The new threshold for Time Warner's anti-takeover 'poison pill' as demanded by TCI head John Malone.
  • $2.5 billion: The amount invested by US West Inc. in Time Warner's entertainment operations in 1993.
  • $28.75: The closing price of TBS Class A shares on the American Stock Exchange on Thursday.
  • $29.125: The closing price of TBS Class B shares on the American Stock Exchange on Thursday.
  • $39.75: The closing price of Time Warner shares on the New York Stock Exchange on Thursday.

Sources:

  • "Time Warner Close to $8 Billion Deal for Turner Broadcasting System" by an unnamed source.
  • The New York Stock Exchange.
  • The American Stock Exchange.
  • US West Inc.
  • Time Warner Inc.
  • Turner Broadcasting System (TBS).
  • Tele-Communications Inc. (TCI).