Charter to acquire Time Warner Cable for $56 bn
26 May 2015
Charter Communications Inc, the third-largest cable operator in the United States, has agreed to acquire the country's second-largest cable operator, Time Warner Cable Inc, for around $56 billion.
Charter and Time Warner Cable today entered into a definitive agreement for Charter to merge with Time Warner Cable, in a deal that values Time Warner Cable at $78.7 billion, including debt.
Charter will provide $100 in cash and shares of a new public parent company (New Charter) equivalent to 0.5409 shares of Charter for each Time Warner Cable share outstanding. The deal values each Time Warner Cable share at approximately $195.71 based on Charter's market closing price on 20 May or approximately $200 based on Charter's 60-trading day volume weighted average price.
In addition, Charter will provide an election option for each Time Warner Cable stockholder, other than Liberty Broadband Corporation or Liberty Interactive Corporation, who will receive all stock, to receive $115 of cash and New Charter shares equivalent to 0.4562 shares of Charter for each Time Warner Cable share they own.
Charter and Advance/Newhouse Partnership (a parent of Bright House Networks LLC) also today announced that the two companies have amended the agreement which the two parties signed and announced on 31 March 2015, whereby Charter will acquire Bright House Networks for $10.4 billion.
That agreement, as amended, provides for Charter and Advance/Newhouse to form a new partnership of which New Charter will own between approximately 86 per cent and 87 per cent and of which Advance/Newhouse will own between approximately 13 per cent and 14 per cent, depending on the Time Warner Cable shareholders' cash election option described above.
The combination of Charter, Time Warner Cable and Bright House will create a leading broadband services and technology company serving 23.9 million customers in 41 states.
Charter said the transactions will drive investment into the combined entity's advanced broadband network, allow for wider deployment of new competitive facilities based WiFi networks in public places, and the footprint expansion of optical networks to serve the large marketplace of small and medium sized businesses.
This, it said, would result in faster broadband speeds, better video products, including more high definition channels, more affordable phone service and more competition, for consumers and businesses.
The scale of the new entity will also result in greater product innovation, bringing new and advanced services to consumers and businesses, including Charter's Spectrum Guide and World Box and other product innovations, it added.
The Charter-Time Warner Cable transaction is subject to approval by both Charter and Time Warner Cable shareholders, regulatory review, and other customary conditions.
The Charter-Advance/Newhouse transaction is subject to several conditions, including the completion of the Time Warner Cable acquisition (subject to certain exceptions if Time Warner Cable enters into another sale transaction) and a separate vote on the Liberty transactions, and regulatory approval.
The three companies expect to close the announced transactions by the end of 2015.
Meanwhile, the Federal Communications Commission has served notice that it would closely scrutinise the deal, focusing not only on absence of harm but benefits to the public.
A key area of regulatory concern would be competition in broadband internet.