Now that Comcast's acquisition of Time Warner Cable has fallen apart, Charter Communications has swooped in to attempt an acquisition of TWC.
In February, Comcast announced its intent to acquire the other cable giant, but that deal officially died in April as Comcast abandoned its efforts following reports that the Department of Justice and Federal Communications Commission were to recommend against the deal. It ended up costing Comcast roughly $336 million to not acquire Time Warner Cable.
As soon as that deal fell apart, reports were already pouring out, indicating that Charter Communications was ready to move on TWC. That became official on Tuesday as the two companies co-announced Charter's intent to merge with TWC and acquire Bright House Networks. The deal values Time Warner Cable at $78.7 billion with Charter providing $100 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. This values TWC shares at about $195.71 based on Charter's market closing price on May 20.
Charter will acquire Bright House Networks for $10.4 billion as part of an amended agreement, which was originally announced in March. New Charter will own between 86% and 87% of Bright House while parent Advance/Newhouse will own between 13% and 14%.
The combination of Charter, Time Warner Cable and Bright House will serve 23.9 million customers in 41 states.
"The teams at Charter, Time Warner Cable and Bright House Networks are filled with the innovators of our industry. Representatives of each of these companies have invented some of the most revolutionary communications products ever created; innovations like video on demand, VOIP phone service, remote storage DVR, cable TV through an app, downloadable security and the first backward-compatible, cloud-based user interface. That spirit of innovation will live on, and it will create real benefits and great long-term value for the customers, shareholders and employees of all three companies," said Charter Communications CEO Tom Rutledge. "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."
"With today's announcement, we have delivered on our commitment to maximizing shareholder value," said Time Warner Cable CEO Robert D. Marcus. "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. 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. We remain wholly committed to bringing the very best experience to our residential and business customers coast to coast."
"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 Bright House CEO Steve Miron. "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."
Tom Rutledge will serve as President and CEO of New Charter with the offer of a new five-year employment agreement. He will also be offered the position of Chairman of the Board, which will consist of 13 directors. The other 12 will consist of
7 independent directors nominated by the independent directors serving on Charter's Board of Directors, 2 designated by Advance/Newhouse, and 3 designated by Liberty Broadband. Charter's current Chairman Eric Zinterhofer, will continue to serve on New Charter's Board.
Image via Consumerist, Flickr Creative Commons