Updated from 10:05 a.m. EDT
said Wednesday it will break off from its
Time Warner Cable
business, a move that will net shareholders a hefty dividend.
The widely-expected separation will cost Time Warner Cable $10.9 billion, which will be paid out as a $10.27 per share dividend to shareholders. Time Warner will receive roughly $9.25 billion of the total. Time Warner Cable expects to fund the one-time dividend through its existing revolving credit facility and $9 billion from a new, committed two-year bridge term financing from a syndicate of banks.
"This is the right step for Time Warner and Time Warner Cable stockholders," said Time Warner President and CEO Jeff Bewkes. "After the transaction, each company will have greater strategic, financial and operational flexibility and will be better positioned to compete. We're bullish on Time Warner Cable's prospects, but its strategic goals and capital needs are increasingly different from those of our other businesses."
Time Warner Cable became a publicly traded company in March 2007, although Time Warner maintained a majority stake in the company. Time Warner said it will exchange its 12.4% interest in TW NY Cable Holding, a subsidiary of Time Warner Cable, for 80 million newly issued shares of Time Warner Cable's Class A common stock. The move will increase Time Warner's ownership stake in Time Warner Cable's common stock from 84% to 85.2%.
Time Warner was rising 24 cents, or 1.5%, to $16.39, and Time Warner Cable was higher by $1.01, or 3.3%, to $31.23.
Among other cable operators,
were all higher Wednesday.