Charter Communications has entered into a deal to acquire John Malone’s Liberty Broadband, in the latest media chess move by Malone.
While far from the glamorous spotlight of Warner Bros. Discovery, F1 or other parts of Malone’s investment portfolio, the broadband deal has been closely followed in negotiations between the parties in recent months. Mr. Malone is also a major shareholder in Charter, the nation’s No. 1 pay-TV provider and major broadband distribution company. Over the decades, the billionaire has earned a reputation for executing dozens of spinoffs, M&A deals, and tracking stock launches to avoid taxes and benefit shareholders.
Under the terms of the agreement, each holder of Liberty Broadband Series A common stock, Series B common stock and Series C common stock will receive 0.236 shares of Charter common stock for each share of Liberty Broadband common stock held.
Each holder of Liberty Broadband Series A Cumulative Redeemable Preferred Stock will receive one newly issued Charter Cumulative Redeemable Preferred Stock for each Liberty Broadband Preferred Stock held. Charter preferred stock “substantially mirrors” the current terms of Liberty Broadband preferred stock, according to a press release.
Liberty Broadband’s principal assets are approximately 45.6 million common shares of Charter and its subsidiary, GCI, Alaska’s largest telecommunications provider. Prior to the completion of Charter’s acquisition of Liberty Broadband, Liberty Broadband has agreed to spin off its GCI business through a distribution to Liberty Broadband’s shareholders.
GCI’s distributions are expected to be taxable to Liberty Broadband and its shareholders, with Charter assuming corporate-level tax liability upon completion of the merger. However, if such entity-level tax liability exceeds $420 million, Charter will be entitled to receive a portion of the tax benefits realized by GCI equal to such excess amount under the Tax Credit Agreement. . The companies currently expect the transaction to close on June 30, 2027, unless otherwise agreed, subject to completion of the GCI spin-off and other customary closing conditions.
As a result of the transaction, Charter will cancel approximately 45.6 million shares of Charter stock currently owned by Liberty Broadband and will issue approximately 34 million shares of Liberty Broadband common stock to holders of Liberty Broadband common stock upon closing, resulting in We expect this to result in a net decrease of approximately 11.5 million shares. Number of shares outstanding.
Liberty Broadband’s $2.6 billion of debt (excluding debt at GCI) will be repaid or assumed by Charter prior to closing, and $180 million of preferred stock will become Charter preferred stock.
“Today, we are pleased to announce this agreement with Liberty Broadband. We are grateful to
For our strategic partnership with Liberty Broadband since 2013, especially for the support of John.
Mr. Malone, Mr. Greg Maffei, and our company, Liberty Broadband, have appointed members of the Board of Directors,” said Charter CEO Chris.
Winfrey said. “We look forward to their continued partnership and support in the coming years as we increase value for our shareholders.”
Mr. Malone said the transaction “streamlines Liberty Broadband’s trading discount and ultimately provides enhanced liquidity for shareholders.” He added that he expects the transaction to close in 2027, three years from now, “which is a good fit for Charter’s business strategy under the excellent leadership of Chris Winfrey and the team and for both Charter and Liberty shareholders.” “This reflects my belief in the value creation opportunities of the world,” he added. We look forward to seeing this upward trend continue and owning Charter stock after the merger closes. ”
