A Bloomberg report that came out on Memorial Day was right on the money when it came to Charter’s ambitions to take on cable juggernaut Comcast. Bloomberg learned that Charter would scoop up Time Warner Cable (TWC) for $195 per share, valuing the transaction at roughly $55 billion.
Charter confirmed the acquisition this morning, valuing each TWC share at approximately $195.71. The transaction has an equity value of $55.76 billion, but TWC has long-term debt of $22.64 billion which value the entire whole shebang at over $78 billion.
The TWC acquisition will vault Charter from fourth place in the U.S. cable market to second place, right behind Comcast. The combined companies will have an estimated 17.5 million customers compared to Comcast’s 22 million. But we can’t forget about Comcast’s pending purchase of Bright House Networks, which would add another 2.5 million customers, bringing Charter’s total to 20 million according to The Washington Post.
The three combined companies will come together under a new parent company, New Charter.
It is expected that regulators will be more receptive to the Charter-TWC deal, as it would provide increased competition for Comcast rather than giving the #1 player in the market even more power to club its limited competition. Comcast’s bid to gobble up TWC failed in spectacular fashion last month after the FCC made it clear that it wouldn’t approve the merger. With no viable options left to pursue, Comcast abandoned the deal on April 24.
"Today, we move on. Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn’t agree, we could walk away,” said Comcast CEO Brian Roberts at the time. While the FCC didn’t agree with that merger, lobbyists had their wallets fattened to the tune of $32 million.