NEW YORK — Charter Communications (Nasdaq: CHTR) is buying Time Warner Cable (NYSE: TWC) in a cash and stock deal worth $55.33 billion, the two firms announced Tuesday. The merger creates one of the largest broadband and pay TV companies in the United States.
The deal values Time Warner Cable at $78.7 billion. Charter will provide $100.00 in cash and shares of a new public parent company (“New Charter”) equivalent to 0.5409 shares of CHTR 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 May 20
In addition, Charter will acquire Bright House Networks (“Bright House”) for $10.4 billion.
Charter also said Tuesday that Liberty Broadband Corporation (“Liberty Broadband”) has agreed to purchase, upon closing of the Time Warner Cable transaction, $4.3 billion of newly issued shares of New Charter at a price equivalent to $176.95 per Charter share, which represents Charter’s closing price as of May 20, 2015.
As previously-announced, Liberty Broadband will also purchase, upon closing of the Charter-Advance/Newhouse transaction, $700 million of newly issued Charter shares at a price equivalent to $173.00 per Charter share.
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.
Tom Rutledge, President and CEO of Charter Communications said in a statement, “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. 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.
“New Charter will capitalize on technology to create and maintain a more effective and efficient service model. Put simply, the scale of New Charter, along with the combined talents we can bring to bear, position us to deliver a communications future that will unleash the full power of the two-way, interactive cable network.”
New Charter will be led by Rutledge, who will serve as President and CEO. Additionally, Rutledge will be offered a new five-year employment agreement. At the close of the transactions, New Charter’s Board will consist of 13 directors including Rutledge, who will be offered the position of Chairman.
The Charter-Time Warner Cable transaction is subject to approval by both Charter and Time Warner Cable shareholders, regulatory review, and other customary conditions.