What Comcast could not achieve (owing to pressure from regulators), Charter Communications Inc. has managed to do - acquire Time Warner Cable.
On Tuesday, May 26, Charter Communication revealed that it had entered into a "definitive agreement" to merge with cable network Time Warner Cable. Fending of competition from Patrick Drahi's Altice SA, John Malone's Charter Communication acquired the cable company by shelling out $55.3 billion in cash and stock.
The deal is valued at $78.7 billion (including debt transactions) and will aid Charter Communication in expanding its customer base, which will in turn help the company in growing in the competitive pay-TV space.
"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," said Tom Rutledge, Charter Communication's CEO. "The scale of New Charter positions us to deliver a communications future that will unleash the full power of the two-way, interactive cable network."
According to the terms of the merger, Charter Communication will offer Time Warner Cable's investors $195.71 per share (14 percent over Time Warner Cable's stock price at the close of May 22) of the new parent company - New Charter - of which $100 will be in cash and the remainder in stock.
Shareholders who opt for $100 in cash will get 0.5409 shares of Charter Communication. Alternately, the Time Warner Cable stock holders can opt for $115 in cash and 0.4562 in Charter's shares.
This transaction will require regulatory approval which is expected to be sanctioned by end 2015.
Stanford-based Charter Communications also revealed that it is going ahead with is proposal to acquire Bright House Networks, which is also a cable company. The company is shelling out $10.4 billion to acquire Bright House Networks, which will further boost the former's presence in the industry. Once the deals are completed the three entities i.e. Time Warner Cable, Bright House Networks and Charter Communication will be called New Charter.
Post the merger, New Charter would go on to become the second biggest TV and Internet service provider in the U.S., boasting nearly 23 million customer accounts vis-à-vis rival Comcast's 27.2 million.
Photo: Mike Licht | Flickr
