This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Comcast's NBCUniversal Deal Proves Merger Boom

Stocks in this article: CMCSA GE MS C DELL VMED

NEW YORK ( TheStreet) -- Comcast (CMCSA) is buying a remaining 49% stake in NBCUniversal from General Electric (GE) for $16.7 billion, in a move that's pushing both companies' shares to new highs.

While the deal shouldn't be a major surprise to investors in either Comcast or GE after both companies first formed the NBCUniversal joint venture in 2009, it does come earlier than expected and raises the value of the venture by $1.6 billion. More importantly, the move and similar large-sized deals may indicate that the boom in corporate mergers is more than a fleeting trend.

Consider that earlier in 2013, Morgan Stanley (MS) surprised investors by announcing a plan to take full control of a similarly structured brokerage joint venture it formed with Citigroup (C) in 2009. The stake buy-ins could also be taken as a sign of growing confidence from acquirers and the improving performance of JV-targets.

Given NBCUniversal's cash flow generation and the cost of financing in current markets, it appears Comcast believes accelerating the JV buy-in could actually deleverage the company in short order.

Meanwhile, Dell (DELL) is in the midst of what could be a post-crisis record leveraged buyout deal -- which could increase in price -- and cable TV conglomerate Liberty Media (LBTYA) recently announced an agreement to buy Virgin Media (VMED) in a stock deal worth roughly $16 billion.

It's no coincidence that C-Suites at the likes of Comcast and Morgan Stanley are eager to take control of ventures cut in the wake of the financial crisis as competitors try to rationalize their operations and deliver shareholders tangible asset value.

Recovering share prices, booming debt markets and an increasing appetite by banks to provide merger or buyout financing appear to be adding fuel to those animal spirits.

In Tuesday's deal, Comcast will be buying up General Electric's 49% stake in the NBCUniversal venture both companies cemented in 2011, while also buying up GE's iconic 30 Rock building and the New Jersey headquarters of CNBC for $1.4 billion. Comcast will fund the deal using $11.4 billion in cash, in addition to debt and the issuance of new stock.

The deal, announced in Comcast's fourth quarter earnings, also comes with strong results from the cable giant that includes a 20% boost to its dividend and an authorization to repurchase $2 billion in stock in 2013.

"I am really pleased to report strong results for the 4th quarter and the full year of 2012 and delighted that we are able to accelerate the acquisition of General Electric's 49% common equity interest in NBCUniversal while also having the financial strength to return capital to shareholders," Brian Roberts, chairman and CEO of Comcast said in a statement released with earnings.

"To underscore our confidence, we are increasing our dividend by 20% and plan to and plan to repurchase $2 billion of our stock this year.

Separately, GE said the stake sale and a divestiture of real estate assets will cause accounting gains of $1 billion for the parent company and $900 million for GE Capital the industrial conglomerate's financial services arm.

"GE will receive $12.0 billion in cash, $4.0 billion in Comcast guaranteed debt, and $0.7 billion of preferred stock," GE said in a statement Tuesday. In total GE is selling $18.1 billion in assets, when real estate assets are included.

"This transaction allows us to significantly increase the cash we plan to return to shareholders in 2013, to approximately $18 billion, and to continue to invest in our industrial business," Jeff Immelt, GE Chairman and CEO, said in a statement. GE is now authorized to repurchase $35 billion in stock, with plans to buy back $10 billion in shares this year.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs