Explain why GE might have been willing to accept subordinated debt and preferred stock for such a large part of the purchase price? Why might Comcast want to use debt and preferred equity as part of the purchase price?

Question

Quizplus · Accepted Answer

The Answer is GE was in a hurry to exit NBCU entirely due to a desire to focus on its core industrial businesses and due to cultural differences. Also, GE's expectations for growth in the value of media companies may differ significantly from Comcast's. GE may also have wanted to defer the payment of taxes on a portion of the gain they may have realized on the sale of their minority position. Comcast was eager to use debt and preferred stock due to current low interest rates and dividend yields. Also, the use of debt and preferred stock lowered the present value of the purchase of GE's minority interest to Comcast.

Explain Why GE Might Have Been Willing to Accept Subordinated