Charter Communications and privately held Cox Enterprises on Friday said they are merging in a $34.5 billion deal, creating a juggernaut in cable and Wi-Fi — the emphasis on Wi-Fi.
The proposed merger comes as cable providers continue to bleed video subscribers and look to build more scale in their more stable broadband businesses. By combining, the companies aim to take on the larger broadband providers such as cable rival Comcast and telecom giants Verizon and AT&T.
Charter has 30 million broadband customers, and Cox has 6.5 million.
The announcement is the rare M&A deal this year, as a topsy-turvy stock market and economics news have kept companies on the sidelines.
At the same time, lots of companies will watch this deal closely as it will be a test case for President Donald Trump’s regulators who, it is believed, will go softer on big M&A.
If the deal is given the green light, the combined company will be based out of Stamford, Connecticut, but will keep Cox’s Atlanta campus. The combined company will be named Cox and its cable operations will go under the Specrtum name used by Charter.
“We’re honored that the Cox family has entrusted us with its impressive legacy and are excited by the opportunity to benefit from the terrific operating history and community leadership of Cox,” Chris Winfrey, Charter president and CEO said in a statement. “Cox and Charter have been innovators in connectivity and entertainment services – with decades of work and hundreds of billions of dollars invested to build, upgrade, and expand our complementary regional networks to provide high-quality internet, video, voice and mobile services.”
“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,” Cox Enterprises chairman and CEO Alex Taylor added.
Charter has been particularly aggressive in deals, agreeing last fall to buy Liberty Broadband in an all-stock deal. The unit was part of billionaire John Malone’s empire. Malone is also a large shareholder of Charter. In 2016, Charter acquired Time Warner Cable and BrightHouse Networks for $67 billion. Previously, Charter had purchased assets of Cablevision, the Long-Island based cable company controlled by the Dolan family.
Charter in its release on Friday said it expects to cut $500 million in annual costs over three years by combining with Cox. Cox will be the largest shareholder in the combined company with a 23% stake.
The breakdown of the value of the deal is $21.9 billion of equity and $12.6 billion of net debt and other obligations.
More to come…
