As expected, Charter Communications confirmed on Tuesday it has agreed to acquire rival U.S. cableco Time Warner Cable (TWC) for $56.7 billion.
Charter has also amended its $10.4 billion acquisition of Bright House Networks. The combination of all three companies will create a cable provider that serves 23.9 million customers in 41 states, closing the gap on market leader Comcast, which ended March with 27.2 million.
"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, CEO of Charter, who will lead the merged entity once the transaction closes, which is expected to happen by the end of 2015.
Charter will p ay $195.71 per share in cash and stock for TWC. TWC shareholders will have a choice of receiving either $100 or $115 in cash, with the remainder paid in the form of shares in a new public parent company, New Charter. The offer values Time Warner Cable at $78.7 billion, consisting of $56.7 billion of equity plus $22.7 billion of net debt minus $700 million of equity investments.
This is the second time that Charter has made a move for Time Warner Cable. In February 2014, it made a $132.50 per-share offer that was rejected by TWC, which subsequently accepted a $158.80 offer from Comcast. However, the merger was called off in April this year in the face of stiff regulatory opposition.
On Monday, Bloomberg reported that Charter was on the cusp of agreeing to acquire TWC for $55.1 billion.
Sources cited by the news outlet claimed that Patrick Drahi, founder of cable group Altice, had also shown interest.
Last week, Altice announced its impending entry into the U.S. cable market by agreeing to acquire regional service provider Suddenlink in a deal worth $9.1 billion.
While in the country, it is alleged that Drahi also held talks with TWC chief executive Rob Marcus.
Meanwhile, Charter has also renegotiated its $10.4 billion acquisition of Bright House Networks.
Under the terms of the original agreement, Charter and Bright House parent Advance/Newhouse agreed to contribute their assets to a newly-created Charter unit, with New Charter taking a 73.7% stake and Advance/Newhouse the remainder, as well as a $2 billion cash payment.
The revised deal will see New Charter take an 86% stake in the Bright House partnership, with Advance/Newhouse taking the remaining 14% and still receiving the $2 billion payment.
"This agreement recognises 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," said TWC chief Marcus.
To help fund the TWC acquisition, Charter’s biggest single shareholder – John Malone’s Liberty Broadband – has agreed to buy $4.3 billion worth of newly-issued New Charter shares once the TWC deal closes.
As previously announced, to help fund the Bright House deal, Liberty Broadband has also agreed to purchase $700 million of newly-issued Charter stock once that deal completes.
