Charter Communications, Inc. CHTR (“Charter”) and Liberty Media
Corporation LMCA LMCB) (“Liberty Media”) announced today that
Liberty Media has entered into a definitive agreement with investment funds
managed by, or affiliated with, Apollo Management, Oaktree Capital Management
and Crestview Partners to acquire approximately 26.9 million shares and
approximately 1.1 million warrants in Charter Communications, Inc. for
approximately $2.617 billion, which represents an approximate 27.3% beneficial
ownership in Charter and a price per share of $95.50. Liberty expects to fund
the purchase with a combination of cash on hand and new loan arrangements.
“We are excited to make this investment in Charter, the fourth largest cable
provider in the US,” said Greg Maffei, Liberty President and CEO. “Tom
Rutledge and his team have done an impressive job of turning around Charter's
operations and improving its financial position. We look forward to working
with Charter's management team and fellow board members in the future.”
“We are pleased with Charter's market position and growth opportunities and
believe that the company's investments in its high-capacity digital network
which provides digital HD and on demand television, high-speed data and voice,
will benefit its customers and shareholders alike,” said John Malone, Liberty
Chairman.
“This transaction reflects a solid endorsement of the strategy that Tom
Rutledge and his team are implementing at Charter,” said Eric Zinterhofer,
Chairman of Charter. “Apollo, Oaktree, and Crestview have created substantial
value for Charter and its shareholders, and on behalf of Charter's board, we
look forward to working with Liberty Media in creating further value.”
Tom Rutledge, CEO and President of Charter, said, “Liberty Media and John
Malone have a well proven track record in our industry and in creating
shareholder value. While we have made real progress, we are still in the
beginning of our effort to transform Charter, and we welcome the addition of
Liberty Media as knowledgeable shareholders as we grow our products, service
capabilities, and market share. All of us at Charter appreciate the
contributions of Apollo, Oaktree and Crestview which put us on a path for
sustainable success.”
The transaction is expected to close in the first half of the second quarter
of 2013, subject to the satisfaction of customary closing conditions,
including expiration of the waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Upon closing, funds managed by Crestview and Oaktree will hold approximately
7.4% and 2.2%, respectively, of Charter's common shares. Charter's board of
directors appointed a special committee of independent and disinterested
directors to consider the transaction on behalf of the company.
Charter entered into a stockholders agreement that among other things provides
Liberty Media the right to designate up to four directors for appointment to
the Charter board upon the closing of the transaction. Liberty Media expects
to designate John Malone, Chairman of Liberty Media; Gregory Maffei, President
and CEO of Liberty Media; Nair Balan, EVP and CTO of Liberty Global; and
Michael Huseby, CFO of Barnes & Noble. Charter's board of directors will
appoint these directors subject to its normal review of director
qualifications, and upon the resignation of Stan Parker, Darren Glatt, Bruce
Karsh and Edgar Lee in connection with the closing of the transaction, which
is expected to occur sometime after Charter's 2013 annual meeting of
stockholders. Jeffrey Marcus, a partner at Crestview, will remain on the
board. Subject to Liberty Media's continued ownership level in Charter, the
stockholders agreement also provides that Liberty Media can designate up to
four directors as nominees for election to Charter's board of directors at
least through Charter's 2015 annual meeting of stockholders, and that up to
one of these individuals may serve on each of the Audit Committee, the
Nominating and Corporate Governance Committee, and Compensation and Benefits
Committee of Charter's board of directors.
In addition, Liberty Media agreed to, among other things, not increase its
beneficial ownership in Charter above 35% until January 2016 and 39.99%
thereafter. Liberty also agreed not to engage in proxy solicitations for
nominations to Charter's board of directors through the 2015 shareholder
meeting and continue to so refrain as long as its designees are nominated to
the Charter board or the agreement is earlier terminated. Charter approved
Liberty Media's acquisition of beneficial ownership of Charter's shares under
the business combination provisions of the Delaware General Corporation Law.
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