Following months of negotiations, General Electric , parent company of CNBC, and Comcast announced today a definite agreement to form a joint venture that will give Comcast 51% control of NBC Universal and 49% ownership to GE. In a deal valued at about $30 billion, Comcast will gain access to more than a dozen cable networks, along with the Universal movie studios and theme parks. It ranks amongst the Top 10 Biggest U.S. M&A deals for 2009 so far.
The deal, one of the largest in media history, will turn Comcast into one of the world's largest suppliers of media entertainment. (For complete coverage click here)
Some of the key terms of the deal include (Source:Business Wire):
- NBCU will borrow approximately $9.1 billion from third-party lenders and distribute the cash to GE
- NBCU, valued at $30 billion, will be contributed to the newly formed joint venture. Comcast will contribute its programming businesses and certain other properties valued at $7.25 billion
- GE will acquire Vivendi's 20% interest in NBCU for $5.8 billion. GE will purchase approximately 38% of Vivendi’s interest (or approximately 7.66% of all outstanding NBCU shares) from Vivendi for $2 billion in September 2010, if the Comcast transaction is not closed by then. GE will acquire the remaining 62% of Vivendi’s interest (or approximately 12.34% of all outstanding NBCU shares) for $3.8 billion when the transaction closes
- Comcast will make a payment to GE of approximately $6.5 billion in cash subject to certain adjustments based on various events between signing and closing
- The new venture will be 51% owned by Comcast and 49% owned by GE
- GE expects to realize $9.8 billion pre-tax in cash before debt reduction and transaction fees and after buyout of the Vivendi stake. GE expects to realize approximately $8 billion in cash after paying down the existing NBCU debt and transaction fees
- GE will be entitled to elect to cause the joint venture to redeem one-half of its interest at year 3 ½ and its remaining interest at year 7. The joint venture’s obligations to complete those purchases will be subject to the venture’s leverage ratio not exceeding 2.75X EBITDA and the venture continuing to hold investment-grade ratings. Comcast also has certain rights to purchase GE’s interest in the venture at specified times. All such transactions would be done at a 20% premium to public market value with 50% sharing of upside above the closing valuation
- To the extent the joint venture is not required to meet GE’s redemption requests, Comcast will provide a backstop up to a maximum of $2.875 billion for the first redemption and a total backstop of $5.750 billion
Of the top 10 M&A transactions around the world this year, seven have taken place in the United States, according to a report by Dealogic, a provider of software and analytical products to the banking industry. Among the largest deals in the United States, today's announcement occupies the seventh place, with Pfizer's take over of Wyeth taking the number one spot while competitor and pharmaceutical giant Merck slides to second place on its acquisition of NJ-based Schering Plough. Today's deal ranks 10th in the world for the year.
Here is a look at the top 10 M&A Transactions in 2009.