UPDATED 09:09 EDT / MAY 26 2015

NEWS

Charter to acquire Time Warner Cable for $78.7 Billion

Charter Communications has agreed to acquire Time Warner Cable Enterprises Inc. in a cash plus stock deal that values the company at a massive $78.7 billion.

The deal was announced on Tuesday, and will see Charter pay $100 in cash and shares of a new parent company — dubbed New Charter — equivalent to 0.5409 shares of Charter for each Time Warner Cable share outstanding; raising Time Warner individual share value to $195.71.

As well, Charter plans to give Time Warner Cable’s shareholders an election option to receive $115 in cash plus New Charter shares equivalent to 0.4562 Charter shares for each Time Warner Cable share they own.

The acquisition will put Charter in a position where its subscriber pool is large enough to compete with Comcast Corp., the U.S.’s largest cable provider.

As well as this, Charter and Advance/Newhouse Partnership, the parent company of Bright House Networks LLC, the U.S.’s sixth largest cable company have made amendments to an earlier agreement that will see Charter buy the subsidiary for $10.4 billion. The new agreement will see New Charter purchase between 86 and 87 percent of Bright House Networks, with Advance/Newhouse retaining between 13 and 14 percent of the company.

According to Charter, the merger of Time Warner Cable’s and Bright House Networks’ resources will result in “”a leading broadband services and technology company serving 23.9 million customers in 41 states”. As part of the arrangements, New Charter will also plough additional investment into the two company’s broadband networks. That will lead to the wider deployment of public Wi-Fi hotspots and an expansion of optical networks for small and medium-sized businesses.

In addition, the merger will also help to return offshore jobs to the U.S., the companies said.

“With today’s announcement, we have delivered on our commitment to maximizing shareholder value. 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,” said Robert D. Marcus, Chairman and CEO of Time Warner Cable.

“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.”

The companies said that Tom Rutledge, who has served as CEO and President at Charter Communications since February 2012, will lead New Charter when it’s formed.

The deal, which is still subject to the approval of both Charter and Time Warner Cable shareholders, as well as regulators, is set to close at the end of the year.


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