STAMFORD, Conn. - Charter Communications , Inc. (NASDAQ: NASDAQ:CHTR) and Liberty Broadband (NASDAQ:LBRDA) Corporation (NASDAQ: LBRDA, LBRDK, LBRDP) have announced an all-stock transaction agreement where Charter will acquire Liberty Broadband. Each Liberty Broadband common stockholder will receive 0.236 of a Charter common stock share per owned share, with fractional shares paid in cash. Liberty Broadband preferred stockholders will receive one share of newly issued Charter preferred stock for each share held, reflecting the current terms of Liberty Broadband preferred stock.
Prior to the acquisition's expected close on June 30, 2027, Liberty Broadband will spin off its subsidiary GCI, LLC, Alaska's largest communications provider. The distribution to Liberty Broadband stockholders is anticipated to be taxable, with Charter bearing the corporate tax liability.
The transaction will lead to Charter retiring around 45.6 million of its shares owned by Liberty Broadband and issuing approximately 34 million shares to Liberty Broadband common stockholders. This results in a net reduction of about 11.5 million Charter shares. Liberty Broadband's $2.6 billion debt, excluding GCI's debt, will be repaid or assumed by Charter before closing. Additionally, $180 million of Liberty Broadband's preferred equity will become Charter preferred equity post-transaction.
The agreement was unanimously recommended by a special committee of independent Charter directors and approved by both companies' Boards of Directors. The closing conditions include approval by a majority of voting power from the respective stockholders of Charter and Liberty Broadband, excluding certain shares, and regulatory approvals.
John Malone and Greg Maffei, key shareholders of Liberty Broadband, have agreed to vote in favor of the transaction, representing approximately 48% and 4% of Liberty Broadband's voting power, respectively. Maffei, who will step down as CEO of Liberty Broadband at year's end, will continue as a Charter director and shareholder.
The transaction aims to provide Liberty Broadband shareholders with enhanced liquidity and direct ownership in Charter's equity. Charter will continue repurchasing its shares from Liberty Broadband at about $100 million per month until closing, with adjustments as necessary.
This news is based on a press release statement.
In other recent news, Charter Communications has seen significant developments in its leadership and financial performance. Adam Ray has been appointed to head the Spectrum Enterprise division, succeeding Bill Archer who will transition into an advisory role. This shift is part of a broader strategy to streamline commercial operations, a move that has led to a 29% increase in retail revenue since 2020.
Charter Communications has also experienced a series of adjustments in stock targets by financial firms following its recent earnings release. Benchmark and BofA Securities raised their stock targets to $450, while RBC Capital Markets upped its target to $390. These increases were influenced by the company's financial projections for 2025 and potential merger with Liberty Broadband.
In terms of earnings, the company reported a net income of $1.3 billion with free cash flow of $1.6 billion. Despite losing 110,000 internet customers, Charter added 545,000 Spectrum mobile lines, leading to a 1.6% increase in revenue and a 3.6% rise in adjusted EBITDA. These developments highlight Charter's strategic investments and customer-focused initiatives, with plans for continued growth in mobile offerings and investment in multi-gig services and potential video packages.
InvestingPro Insights
Charter Communications' acquisition of Liberty Broadband marks a significant strategic move in the media industry. According to InvestingPro data, Charter boasts a substantial market capitalization of $62.51 billion, underlining its position as a major player in the sector. This is further supported by an InvestingPro Tip highlighting Charter as a "prominent player in the Media industry."
The company's financial health appears robust, with a revenue of $54.87 billion in the last twelve months as of Q3 2023. Charter's profitability is also noteworthy, as indicated by an InvestingPro Tip stating that the company has been "profitable over the last twelve months." This financial stability could provide a solid foundation for integrating Liberty Broadband's assets and managing the associated debt.
Investors should note that Charter's stock has shown strong performance recently, with an InvestingPro Tip pointing out a "strong return over the last month." This is corroborated by the data showing a 20.23% price total return over the past month. Such positive momentum could reflect market confidence in Charter's growth strategy, including this acquisition.
For those interested in a deeper analysis, InvestingPro offers additional tips and insights. Currently, there are 8 more InvestingPro Tips available for Charter Communications, providing a comprehensive view of the company's financial position and market performance.
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