Today, Charter Communications and Cox Communications announced that they have reached a merger agreement.
According to the announcement, “Charter will acquire Cox Communications’ commercial fiber and managed IT and cloud businesses, and Cox Enterprises will contribute Cox Communications’ residential cable business to Charter Holdings, an existing subsidiary partnership of Charter.”
The two companies will change the company name to Cox Communications but will use the Spectrum brand — currently used by Charter — throughout their combined footprint.
In February, the shareholders of Charter and Liberty Broadband approved the merger of those two companies. Today, Liberty Broadband announced that they will “accelerate the closing of its previously announced acquisition by Charter to occur contemporaneously with Charter’s combination with Cox.”
According to the details provided in the announcement, Cox will receive:
- $4 billion in cash
- $6 billion notional amount of convertible preferred units in Charter’s existing partnership
- Approximately 33.6 million common units in Charter’s existing partnership (with an implied value of $11.9 billion), which are exchangeable for Charter common shares
Though Charter is a publicly traded company, Cox has been privately held since 2005.
“Our family has always believed that investing for the long-term and staying committed to the best interests of our customers, employees and communities is the best recipe for success,” said Cox Chairman and CEO Alex Taylor.
“In Charter, we’ve found the right partner at the right time and in the right position to take this commitment to a higher level than ever before, delivering an incredible outcome for our customers, employees, suppliers and the local communities we serve.”
According to the announcement, Taylor will become chairman of the new combined board, and Cox will “have the right to nominate an additional two board members to Charter’s 13-member board.” The two companies will jointly assume Cox’s outstanding debt of about $12 billion.
In an email released this morning, MoffettNathanson Co-Founder and Senior Analyst Craig Moffett wrote, “That Cox was at last willing to accept a merger proposal after saying ‘no’ so many times is a testament to the recent success, or perhaps rather to the promise, of Charter’s still relatively new bundling and packaging strategy. Charter’s mobile-first convergence strategy looks like it is working, and that strategy can be easily ported to Cox. So can Charter’s streaming-included video strategy.”
