Why Time Warner Cable Stock Jumped 16% in May

What: National cable giant Time Warner Cable saw its stock rise by 16% during the month of May, according to S&P Capital IQ data. The gain pushed shares to a fresh all-time high above $180.

TWC data by YCharts

So what: The stock rose in response to a merger deal, announced late in the month, that was reached with Charter Communications . The deal valued Time Warner Cable at $195 per share, or slightly below $80 billion.

Now what: At closing, Time Warner Cable investors can expect to receive $100 in cash for each share that they own, in addition to 0.54 shares of the combined entity. The merged business will also include telecom giant Bright House Networks.

Together, the three merged companies will cover 41 states and serve 24 million subscribers across cable, phone, and high-speed Internet services. And the large scale of the new business, management says, will bring "faster broadband speeds, better video products, including more high definition channels, more affordable phone service and more competition, for consumers and businesses."

The reference to more competition and improving customer service is a nod to the fact that this deal will need to pass muster with government regulators before it can proceed. The buyout is also contingent on shareholders at both Charter and Time Warner Cable voting to approve it.

Still, if all goes according to plan, the transaction should close before the end of 2015.

The article Why Time Warner Cable Stock Jumped 16% in May originally appeared on Fool.com.

Demitrios Kalogeropoulos owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.