Time Warner Elects Cable "Spin"
Deal Still Expected To Close By End of 1Q
Mike Farrell -- Multichannel News, 2/20/2009 10:36:36 AM
Time Warner Inc. said after market close Thursday that it would elect to separate its cable unit through a spin-off distribution that would involve a pro rata dividend of all the Time Warner Cable held by Time Warner to Time Warner shareholders.
The company still expects the spin to occur before the end of the current quarter.
Time Warner first announced the decision to split off its interest in the cable unit in May 2008.
Earlier this month it received the final governmental approvals for the separation.
While the transaction has been expected for months, just what form it would take has been the subject of some speculation. In a research note, Collins Stewart media analyst Tom Eagan wrote that the dividend option was more likely because an exchange would require Time Warner Inc. to offer a premium to buy back Time Warner Inc. shares, a dilutive option.
Time Warner Cable has said that as part of the separation it would issue a $10.26 per share cash dividend (or about $10.9 billion in total) to all of its shareholders. As part of that distribution, Time Warner Inc. was expected to receive about $9.25 billion.
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