Comcast's NBCUniversal Deal Proves Merger Boom
"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.
For Comcast, taking control of NBCUniversal will complete its transformation from a content distributor by way of cable and broadband networks to a fully-integated media behemoth that also owns top broadcast, cable TV, film studio and theme park assets.
The deal may also reflect improving operating results that make a large stake acquisition opportunistic given expectations of continued growth.
In 2012, NBCUniversal revenue rose nearly 13% to over $23 billion in annual sales, while operating cash flow grew over 9% to $4.1 billion.
"We are excited about the future prospects of NBCUniversal," Roberts said on CNBC. "Our shareholders have 100% of the upside here," he added.
Such sentiment mirrors similar commentary from Morgan Stanley chief executive James Gorman in explaining a far faster-than-expected planned acquisition of the bank's brokerage joint venture with Citigroup.
"After a year of significant challenges, Morgan Stanley has reached a pivot point. We demonstrated meaningful progress in our Wealth Management Joint Venture, reaching the highest pre-tax margin since the inception of the JV," Gorman said, in January.
In fourth-quarter earnings , Morgan Stanley also showed long overdue progress on the brokerage unit's profitability. Net revenues were $3.5 billion and pre-tax margin rose to 17%, far above the 10% that had raised some investor and analyst alarm in past quarters. When the brokerage JV was cut, Morgan Stanley forecast 20% margins.
On news of the deal, Comcast shares rose over 7% to $41.71 in after-hours trading, a new record high for the company. General Electric shares gained nearly 3% to $23.21, reaching a five-year high in after-hours trading.