Charter to Buy Time Warner Cable and Bright House Networks; Aims to Widen Subscriber Base
In a cash-and-stock deal announced last Friday, Charter Communications Inc is nearing the close of a contract to buy Time Warner Cable Inc at about $55.1 billion, which comes down to $195 a share.
Charter Communications Inc, is an American company offering cable television, high-speed Internet and telephone services to more than 5.9 million customers in 29 states. By revenues, it is the fourth-largest operator in the United States, behind Comcast, Time Warner Cable and Cox Communications, whereas, by residential subscriber lines, it is the tenth largest telephone provider.
Time Warner Cable Enterprises Inc, referred to as Time Warner Cable, is also an American cable telecommunications provider that operates in 29 states and has 31 operating divisions. It was spun out from its parent company Time Warner in March 2009, as part of a restructuring operation and since then, has been an entirely independent company. Currently, it is valued at $48.4 billion.
Charter, which is expected to proceed with the acquisition in this week itself, has agreed to pay $195 per share, which is 14 percent above Time Warner Cable’s closing price on May 22. It would bring in $100 a share in cash and the rest in its own stock. The deal, if it happens, would allow Charter to almost quadruple the number of its cable subscribers, gaining 12 million customers in cities including New York, Los Angeles and Dallas.
Post this takeover, Charter has plans to merge Bright House Networks, a smaller cable company, into the combined Charter-Time Warner Cable. This would make Charter formidable enough to take on Comcast, the largest US cable company, whose own bid for Time Warner Cable did not see the light of the day, owing to regulatory hurdles.
Meanwhile, spokespersons from both the companies, citing reasons of confidentiality, remained tight-lipped about the deal.
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