(Bloomberg) — Cable billionaire John Malone’s Liberty Broadband Corp. is proposing an all-stock merger with Charter Communications Inc., one of the top pay-TV providers in the US and another of the media investor’s key holdings.
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In a statement Monday, Liberty said it’s proposing the deal in response to an initial merger proposal from a special committee of Charter directors.
A merger would consolidate two public companies in which Malone holds significant interests. He holds a 49% voting stake in Liberty Broadband. Liberty in turn has a 26% interest in Charter on a fully diluted basis, according to Charter officials, and also operates an Alaskan telecom company.
Some of Malone’s investments have registered steep declines as the pay-TV industry has lost customers to streaming and other forms of video entertainment, like YouTube.
Prior to Monday’s announcement, Liberty Broadband was down almost 70% from its high in 2021. Other holdings including Warner Bros. Discovery Inc. and Qurate Retail Class A are also down sharply.
Under the terms of the proposal, investors in Liberty Broadband common stock would receive 0.29 share of Charter Class A stock in a tax-free exchange for each they now own. That values their shares at more than $96 each based on Charter’s closing price of $331.62.
Charter initially offered 0.228 of a share for each of Liberty Broadband, according to a filing.
“Liberty’s proposed transaction would rationalize the dual-corporate structure between Charter and Liberty Broadband, providing enhanced trading liquidity and removing Liberty Broadband’s existing governance rights,” Liberty Broadband Chief Executive Officer Greg Maffei said in the statement.
Class A shares of Liberty Broadband rose 20% to $73.50 in extended trading after the announcement. Charter shares were down less than 1%.
According to the Liberty counterproposal, Charter would assume or refinance Liberty Broadband’s debt. Approval of the deal would require the consent of Liberty Broadband investors not affiliated with Malone.
The proposed deal includes a closing date of June 30, 2027, or earlier if the parties mutually agree, Liberty said.
Malone recently restructured another of his investments, Sirius XM Holdings Inc. Under that deal, Sirius became an independent public company separate from Liberty Media.
(Updates Liberty Broadband’s Charter stake in third paragraph.)
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