Charter to Buy Time Warner Cable in $78.7 Billion Deal

Charter to Buy Time Warner Cable in $78.7 Billion Deal

Charter Communications will officially buy Time Warner Cable (TWC) in a deal that values the latter company at $78.7 billion — so long as the transaction is approved by shareholders and the customary regulatory review, that is.

The deal values TWC shares between $195.71-$200 apiece. Charter will alternatively provide an election option to Time Warner Cable shareholders which combines cash ($115) and shares of the new company.

Additionally, Charter’s prior deal to buy Bright House Networks has been revised as a result of this big one, the company said on Tuesday, forming a partnership between the former firm and Bright House’s parent company, the Advance/Newhouse alliance. The amended agreement will still see Charter acquiring Bright House Networks for $10.4 billion; that created partnership will be owned mostly by the Charter Communications and TWC merger known as New Charter (in the 86-87 percent range).

That trifecta of cable companies will combine to serve 23.9 million customers in 41 states.

Also Read: Time Warner Cable Set to Sell to Charter Communications for $55 Billion (Report)

Charter also shared today that Liberty Broadband Corporation has agreed to purchase $4.3 billion of newly issued shares of New Charter at a price equivalent to $176.95 per Charter share.

The Charter-Time Warner Cable transaction is subject to approval by both companies’ shareholders, regulatory review, and other customary conditions. The Charter-Advance/Newhouse transaction is subject to several conditions as well. The three main companies involved in the complex deal expect the transactions to close by the end of the year.

Current Charter Communications President and CEO Tom Rutledge will continue those roles at New Charter under a new five-year deal. He will also become chairman of a 13-director Board. The remaining 12 members will include seven from Charter’s Board, two designated by Advance/Newhouse, and three from Liberty Broadband. Charter’s current chairman since 2009, Eric Zinterhofer, will continue to serve on New Charter’s Board.

In the end, TWC shareholders are expected to own between approximately 40-44 percent of New Charter, and Advance/Newhouse is expected to own between approximately 13-14 percent of New Charter. Liberty Broadband is expected to own between approximately 19-20 percent of New Charter.

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“With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully-featured voice products, at highly competitive prices,” Rutledge said. “In addition, we will drive greater competition through further deployment of new competitive facilities-based WiFi networks in public places, and the expansion of the facilities footprint of optical networks to serve the large, small and medium sized business services marketplace.”

“This agreement recognizes the unique value of Time Warner Cable, and brings together three great companies that share a common philosophy of strong operations, great products, robust network investment and putting customers first,” added Robert D. Marcus, chairman and CEO of Time Warner Cable. “This combination will only accelerate the great operating momentum we’ve seen over the last year and provide enormous opportunities for our 55,000 dedicated employees.”

“Today’s announcement is good news for customers and potential customers, as well as our employees, since we will be in a stronger position to deliver competitive services, invest in advanced technology, and develop innovative products that will compete with global and national brands,” said Steve Miron, CEO of Bright House Networks. “In addition, I am very pleased that Tom Rutledge will be the CEO of the new company. Tom recognizes the importance of placing a high priority focus on customer care drawing from the expertise of all three companies, and I believe this will be a strong pillar of the new company’s culture.”

Also Read: Comcast Drops Time Warner Bid: 'Today, We Move On'

The product set that New Charter sells will be called Spectrum — think Cablevision’s Optimum and Comcast’s Xfinity — executives said on a Tuesday morning conference call following the news. Also on the call, Rutledge insisted to reporters and media analysts that he is “confident” this particular deal will go through, whereas obviously Comcast’s attempts did not.

Speaking of Comcast, Chairman and CEO Brian L. Roberts commented on Tuesday: “This deal makes all the sense in the world. I would like to congratulate all the parties.”

Also after the announcement, FCC Chairman Tom Wheeler issued the following statement: “The FCC reviews every merger on its merits and determines whether it would be in the public interest. In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved.”

For even more financial specifics on the merger, read the full press release here.

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