Time Warner

(TWX)

and

Comcast

(CMCSA) - Get Report

confirmed that they've reached a deal to acquire the assets of bankrupt

Adelphia

in a cash-and-stock deal that will let Comcast exit Time Warner Cable.

Talk of a deal has been swirling for some time, and in recent weeks

Cablevision

(CVC)

has emerged as a dark-horse suitor. But on Thursday Time Warner and Comcast said they'd reach a deal that would cost $12.7 billion in cash and give Adelphia shareholders -- the company's Chapter 11 creditors, mostsly -- a 16% in a newly public Time Warner Cable.

The result is that Time Warner Cable will control the assets of Adelphia, while Comcast will unwind its 21% shareholding in Time Warner Cable that the company acquired through its acquisition two years ago of AT&T Broadband.

As a result of these transactions, Time Warner Cable will gain systems passing 7.5 million homes, with 3.5 million basic subscribers. Time Warner Cable will then manage a total of 14.4 million well-clustered basic subscribers. Time Warner will own 84% of Time Warner Cable's common stock, and the cable company will become a publicly traded company at the time of closing.

Comcast will emerge from these transactions with 1.8 million additional basic subscribers for a net cash investment of $1.5 billion. Following these transactions, Comcast will serve a total of 23.3 million customers.

Time Warner Cable and Comcast will each acquire a portion of Adelphia's assets, representing 5.0 million basic cable subscribers in the aggregate. Time Warner Cable will pay $9.2 billion in cash and will issue common shares representing 16% of Time Warner Cable's outstanding common equity (taking into account the redemption transaction with Comcast) to Adelphia stakeholders in connection with its acquisition agreement. Comcast will pay $3.5 billion in cash.

Time Warner Cable and Comcast have agreed to swap certain cable systems to enhance their respective geographic clusters of subscribers, the companies added.