Comcast’s deal to buy Time Warner Cable is drawing criticism for being an inside deal, even if at a decent price.
The investment bankers advising TWC — and their ties to Comcast — may add fuel to the speculation.
Stuart Epstein is the chief financial officer of NBCUniversal and plays a key role in the media giant’s strategic business initiatives.
Epstein came to Comcast in 2011 after serving as Morgan Stanley’s global head of media investment banking.
While at Morgan Stanley, Epstein served as a key adviser to Comcast senior management on the company’s $37.5 billion joint venture with General Electric, which led to the formation in January 2011 of NBCUniversal.
TWC’s lead adviser on this merger is Morgan Stanley.
Not only did Morgan Stanley, with its Comcast roots, advise TWC, but another of its advisers on the deal, Centerview Partners, has Morgan Stanley and Comcast roots, too.
TWC worked with Allen & Co. and Citigroup along with Morgan Stanley and Centerview.
None of the relationships are improper or run afoul of regulations — and they are quite common on Wall street.
Nevertheless, in a lawsuit filed on Friday in State Supreme Court in Manhattan, a shareholder alleges that the sale was an “unfair process” and that TWC “failed to engage in good faith negotiations.”
Part of the evidence is TWC “did not protect against potential downfalls in Comcast’s stock price … by negotiating for an exchange-ratio collar.”
That means there is no protection in the all-stock deal if Comcast’s shares fall.
Additionally, there is a no-solicitation clause precluding TWC from seeking a better offer for its shareholders.