Charter, Cox to Combine

Late last week there was a major deal in the communications world, specifically the cable side of things. Charter and Cox have announced a definitive agreement to merge their businesses in a deal that values the privately held Cox at $34.5B. The deal follows a previously announced purchase of Liberty Broadband.

Charter will be paying $4B in cash, $6B in convertible preferred units, and 33.6M in common stock while assuming $12B in debt. Cox’s shareholders will own 23% of the combined entity when you add everything up.  Cox also owns Segra Communications, which will have itself a new parent company.  How that will fit into the mix remains to be seen.

The combined company will be called Cox Communications, while Spectrum will become their consumer-facing brand. Charter’s Christopher Winfrey will remain as President and CEO, while Cox’s Alex Taylor will become Chairman of the board. Cox’s chairman Eric Zinterhofer and two others will join Charter’s board. Meanwhile, Liberty’s three nominees for the board will leave.

The deal is about scale of course, with a combined subscriber count of about 38M. Charter anticipates realizing $500M in annualized synergies within three years of the closing of the deal, much of which will come from procurement and overhead savings. But first regulators will get their say of course, and that process will take quite a while to work itself out.

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Categories: Cable · Mergers and Acquisitions · Metro fiber