Charter to acquire Liberty Broadband
November 14, 2024
Broadband connectivity company and cable operator Charter Communications and Liberty Broadband Corporation have entered into a definitive agreement under which Charter has agreed to acquire Liberty Broadband in an all-stock transaction.
Under the terms of the transaction, holders of each class of Liberty Broadband stock will receive 0.236 of a share of Charter common stock per share, with cash to be issued in lieu of fractional shares. Liberty Broadband’s principal assets currently consist of some 45.6 million common shares of Charter and its subsidiary GCI, the Alaskan telco.
As a result of the deal, Charter expects to retire those shares and to issue approximately 34 million shares to holders of Liberty Broadband common stock at the closing, resulting in a net decrease of around 11.5 million Charter shares outstanding.
In addition, in connection with the entry into the transaction, Charter, Liberty Broadband and Advance/Newhouse Partnership have agreed to amend certain existing governance arrangements of Charter to, among other things, modify the way in which Charter repurchases its shares of common stock from Liberty Broadband during the pendency of the transaction. Charter intends to make repurchases of Charter shares from Liberty Broadband in amounts of approximately $100 million per month, subject to certain adjustments, and as needed incremental repurchases or loans to Liberty Broadband, to allow for the timely repayment of Liberty Broadband debt in anticipation of the combination of the companies at closing. Liberty Broadband will remain subject to the existing voting cap of 25.01 per cent. Proceeds from share repurchases applied to debt service are expected to be tax free.
“We are pleased to announce this agreement today with Liberty Broadband,” said Chris Winfrey, President and CEO of Charter. “I am grateful for Liberty Broadband’s strategic partnership since 2013, and particularly for the support of John Malone, Greg Maffei and our Liberty Broadband nominated board members “We look forward to their continued partnership and support in the coming years in driving value for our shareholders.”
“Today’s announced transaction will rationalise Liberty Broadband’s trading discount and ultimately provide our shareholders with enhanced liquidity,” said John Malone, Chairman of Liberty Broadband. “The transaction closing timeline reflects my belief in Charter’s operating strategy under the excellent leadership of Chris Winfrey and team and the value creation opportunity for both Charter and Liberty shareholders. I look forward to that continued upside, and to holding Charter shares after the merger closing.”
“We are pleased to have reached definitive terms with Charter and provide Liberty shareholders with certainty of a future transaction at an attractive exchange ratio,” added Maffei. “This transaction simplifies our corporate structure and allows our shareholders to participate in Charter’s upside through direct ownership of the equity. In connection with the transaction, we expect GCI will become an independent public company prior to close. Liberty has had a great partnership with Ron Duncan and GCI management since 2018 and will continue to participate in value creation opportunities for the business. Reaching this agreement was an important milestone in my leadership of the company, and I will be stepping down from my role as Liberty Broadband CEO at the end of this year. I look forward to continuing as a director of Charter and a meaningful shareholder.”