Liberty Broadband Intends to Purchase Charter Communications
In a significant move, Charter Communications has announced its intention to acquire Liberty Broadband, the largest shareholder in the U.S.'s largest pay TV provider, which operates under the Spectrum brand.
Charter Communications, one of the leading broadband communications companies in the United States, has enlisted Citi as its exclusive financial adviser for the deal. On the other hand, Centerview Partners has been appointed as the exclusive financial adviser to Charter's special committee. J.P. Morgan, meanwhile, is serving as the exclusive financial adviser to Liberty Broadband.
The deal comes after Liberty Media, controlled by John Malone, announced its plan to split into two companies, one focused on sports and the other on live entertainment.
Under the terms of the agreement, each holder of Liberty Broadband Series A, B, and C common stock will receive 0.236 of a share of Charter common stock per share of Liberty Broadband common stock held. The transaction also includes the transfer of about 45.6 million shares in Charter from Liberty Broadband.
John Malone and related holders, representing about 48% of Liberty Broadband's aggregate voting power, have agreed to vote in favour of the transaction with Charter. Greg Maffei and related Liberty shareholders, representing about 4% of Liberty Broadband's aggregate voting power, have also agreed to vote in favour of the deal.
As part of the agreement, Maffei will step down as Liberty Broadband CEO at the end of the year. He will, however, continue as a director of Charter and a significant shareholder. Maffei also expects GCI, the major asset of Liberty Broadband apart from its shares in Charter, to become an independent public company prior to the transaction's close. GCI, an Alaskan telecommunications company, will be spun off when the acquisition of Liberty Broadband is complete. Liberty Media CEO Greg Maffei will step down as part of the spinoff.
The deal will see Tom Rutledge take over as the new CEO of Charter Communications after the merger with Liberty Broadband.
John Malone, Liberty Broadcast's controlling shareholder, is moving to streamline his media and telecom assets. The existing debt of $2.6 billion (excluding debt at GCI) that Liberty Broadband holds will be repaid prior to closing or assumed by Charter.
Liberty Broadband's legal counsel is O'Melveny & Myers, while Wachtell, Lipton, Rosen & Katz is serving as the special committee's legal counsel.
This acquisition is expected to further consolidate Charter's position as a leading player in the U.S. broadband market and strengthen its pay TV operations under the Spectrum brand. The deal is subject to regulatory approval and other customary closing conditions.
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