Charter Communications Finalizing $56.7 Billion Purchase Of Time Warner
In an attempt to stay competitive with rival Comcast, Charter Communications is finalizing their cash-and-stock purchase of Time Warner for a record $56.7 billion. According to the New York Times, the purchase by Charter Communications increases Time Warner’s valuation to roughly $78.7 billion, a nearly 14 percent jump over its Friday close. Should the purchase reach an amicable close, the merger would be called New Charter, with much of its services being sold under the Spectrum brand name.
Comcast nearly thwarted this inevitable deal last year when they offered $45 billion for Time Warner. With Charter Communications’ purchase of Time Warner, a more diverse selection of services could roll out along with more competitive pricing for the nearly 22 million customers in 41 states who’ll be affected by this newly formed corporation. In a news release by Charter Spectrum, an amendment to the March 31 agreement between Charter Communications and Advance/Newhouse Partnership changes the purchase price of Bright House to $10.4 billion, and gives between 86 percent and 87 percent controlling interest of Bright House to Charter Communications.
Once the transaction between Charter Communications and Time Warner has closed, Liberty Broadband Corporation will purchase approximately $4.3 worth of New Charter shares. The figure was derived as the sum of Charter Communications May 20 closing share price of $176.95. Liberty Broadband will also purchase $700 million worth of Charter Communications shares at the market rate of $173.00 per share. All transactions, according to the release, should close synchronously.
The combination of entities creates a dynamic opportunity for wider reaching WiFi network deployment, and more optical network servicing for small to medium-sized businesses. A new buffet of business-class communications packages will inherently drive down prices of rival Comcast, and drive more investment dollars into Charter Communications. Customers serviced by Charter Communications are expected to experience greater video on demand (VOD) choices, receive VoIP phone services and even remote storage DVR once New Charter has analyzed their new market and customer reach.
Tom Rutledge, current CEO of Charter Communications known for his attention to customer care, will quarterback New Charter and will be offered the position of Board of Directors Chairman. The other 12 directors will be selected as follows: seven from a pool of independent directors of Charter Communications choosing, three from Liberty Broadband and two from Advance/Newhouse. It’s currently unclear what role, if any, the current heads of Time Warner and Bright House will play when all acquisitions have completed, although it’s believed they’ll remain as Board of Directors members.
The initial Charter Communications and Time Warner merger, which will create the second largest cable and broadband customer base in America, is expected to close just before the end of 2015. Learn more about why the Comcast purchase of Time Warner was destined to fall apart.
[Photo by Andrew Burton/Getty Images]
