Washington's opposition to Comcast Corp.'s $45 billion takeover
of Time Warner Cable Inc. will reverberate to Wall Street, as
bankers, lawyers and traders see fees and profits dashed at
regulators" hands.
Bankers stood to collect an estimated $380 million in fees if
the deal closed along with a pair of related, contingent
transactions involving rival cable operator Charter Communications
Inc., according to regulatory filings and estimates from consulting
group Freeman & Co.
But Comcast is planning to drop its pursuit of Time Warner
Cable, according to people familiar with the matter, after stiff
resistance from U.S. regulators.
Charter's bankers at Goldman Sachs Group Inc. would miss the
biggest fee pot, though the outcome will also sting other big banks
and a handful of so-called boutiques.
The deal's demise would also reshuffle the rankings of M&A
advisers known as "league tables." J.P. Morgan Chase & Co., a
Comcast banker, would drop from second to third in Dealogic's 2014
U.S. tables by dollar volume of deal assignments, while Skadden,
Arps, Slate, Meagher & Flom LLP, lawyers for Time Warner
Cable's independent directors, would drop from first to third.
Davis, Polk & Wardwell LLP, which advised Comcast, would drop
outside the top 10.
Yet for advisers, hope springs eternal. A failed deal would
restart what is widely expected to be a new round of consolidation
of cable operators. Charter, for example, which had earlier lost
out in its effort to buy Time Warner Cable, would be free to try
again. Comcast, one of the hungriest buyers in telecommunications
sector, could look for its next big target. And Bright House
Networks LLC, a smaller operator whose sale to Charter had hinged
on the Comcast deal closing, could find itself prey again.
Another group dinged: Traders that had bet on the deal going
through. Time Warner Cable shares were roughly one-quarter owned by
hedge funds as of Dec. 31, many of them so-called arbitrageurs who
seek to profit from takeovers.
That said, investors broadly had been skeptical of this deal's
chances for months--evidenced by Time Warner Cable's shares trading
well under the implied offer price--which may help stem losses, as
will offsetting bets known as hedges. Time Warner Cable shares fell
0.6% to $148.76 as of 4 p.m. Thursday, while Comcast gained 0.8% to
$59.23.
The Comcast deal, struck 14 months ago, would be the
second-largest takeover scuttled at the hands of U.S. antitrust
regulators. Sprint Corp.'s planned takeover of MCI Worldcom, called
off in 2000 after the Justice Department sued to block it, was
larger.
It's not the first bum deal for Comcast. The company has now
been involved in three of the 16 largest attempted takeovers to
fail for one reason or another, according to Dealogic. It was
outbid for MediaOne Group Inc. by AT&T Inc. in 1999 and
rebuffed by Walt Disney Co. in 2004.
Write to Liz Hoffman at liz.hoffman@wsj.com and Maureen Farrell
at maureen.farrell@wsj.com
Corrections & Amplifications--Time Warner Cable shares fell
0.6% to $148.76 as of 4 p.m. Thursday, April 23. An earlier version
of this article reported the change and share price
incorrectly.
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