Staff WriterBreffni Barrett, an investor acting as representative of Time Warner Cable shareholders, has moved to sue Comcast Corp. for their intended acquisition of TWC, which was proposed at $45.2 billion. In a complaint filed on February 14th to the New York State Supreme Court in Manhattan, Barrett accused Comcast of unfair dealing in their pursuit of Time Warner, writing: “Since rumors first leaked in mid-2013 about several companies interested in acquiring Time Warner, it has been reported that Time Warner failed to engage in good faith negotiations,” Perhaps more damningly, Barrett also reported that Time Warner Cable management would receive “immediate benefits from the closing of the transaction,” which included more than $60 million in “special payments”. Unfortunately for Barrett, it is unlikely that his legal actions against Comcast will yield the results he and TWC's shareholders may have hoped for. As explained by Deadline reporter Dominic Patten, class action lawsuits such Barrett's are easy to file and promote, but allegations regarding bad behavior by Comcast's board of directors will be exceptionally difficult to prove. The contested merger was subject to approval by shareholders from both companies involved, as well as heavy scrutiny from the FCC and the U.S. Department of Justice. In the end, there is little chance that Barrett's lawsuit will gain traction in putting a stop to Comcast's takeover of Time Warner. Antoine Gara, staff reporter for TheStreet, has claimed in a recent that article that Comcast's proposed takeover will be a healthy development for the American cable industry. He remarks on Charter Communications' attempted courting of Time Warner Cable in the months leading up to Comcast's proposal, stating that,
“Comcast's (CMCSA_) all-stock $158.82-a-share deal for
Time Warner Cable(TWC_) is far superior to anything that Charter Communications (CHTR_) could cobble up through debt financing, synergies, net operating loss carryforwards and the like.” Gara goes on to describe the antitrust issues that have risen in the wake of one of the U.S.'s largest cable companies buying out its biggest competitor, reasoning that the resulting deal would yield far greater benefits for the merged company and its consumers: “Because the combined Comcast and Time Warner Cable would be far less leveraged than any Charter Communications deal, it can reinvest in its network and innovate its service offering, something that was a common theme on a call with analysts. In particular, mobile and wireless offerings appear to be an area where investment could be targeted.” Stay tuned for further updates on this developing story!
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