Cable Behemoth Charter and Cox announce $34.5 billion merger: You need to know about this deal
Charter Communications has agreed to receive $34.5 billion in merger Cox Communications amid an increasing struggle for cable companies, due to the popularity of streaming services. The two companies reached a definite agreement to combine their businesses in a transformative transaction.
The proposed charter merger and Cox will bring together two of the top three cable companies in the United States.
Cox Communications is the third largest cable company in the United States. The company has 6.5 million digital wired, internet, telephone and home security customers. From California to Virginia, it has strong operations in all states of the United States.
Charter Communications, commonly known as Spectrum, on the other hand, has more than 32 million customers in 41 U.S. states.
After the decision, Charter stocks rose more than 8% in the former market.
Charter and Cox deal
Charter Communications said Friday it will acquire commercial fiber from Cox Communications and manage it and its cloud business.
Cox Enterprises will contribute Cox Communications’ residential cable business to Charter Holdings (Charter Holdings), an existing subsidiary partnership in the Charter.
After the transaction is concluded, Cox Enterprises will own 23% of the combined entity’s fully diluted shares.
As part of the deal, Cox will have $4 billion in cash, according to the press release. In addition, the company has the right to have a nominal quantity convertible priority unit of $6 billion in Charter’s existing partnership. These units pay 6.875% of the coupons and can be converted into a franchise partnership unit that can then be exchanged for Charter common stock.
Cox will also acquire approximately 33.6 million ordinary units in Charter’s existing partnership with an implied value of $11.9 billion and can be exchanged for leased common stock.
The deal requires approval from franchised shareholders and regulators, including $12.6 billion in debt.
After the deal is completed, Charter CEO Chris Winfrey will become the president and CEO of United. Cox CEO and Chairman Alex Taylor will serve as chairman.
The deal is expected to be completed at the same time as the merger of Charter and Liberty Broadband, which received approval from Charter and Liberty broadband shareholders in February.
Why did the Charter merge with Cox?
According to a Reuters report, the cable industry has been under attack for years by streaming services such as Disney, Netflix, Amazon and HBO Max, as well as internet plans provided by mobile phone companies.
The so-called “rope cutting” has cost the industry millions of customers and has them finding ways to compete successfully.
