(Bloomberg) — Cable billionaire John Malone’s Liberty Broadband Corp. is proposing an all-stock merger with Charter Communications Inc., one of the largest pay-TV providers in the U.S. and another major holding of the media investor.
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In a statement on Monday, Liberty said the company was proposing the deal in response to an initial merger proposal from a special committee of charter directors.
A merger would combine two publicly traded companies in which Malone holds significant stakes. He owns a 49 percent voting stake in Liberty Broadband. Liberty, in turn, owns a 26 percent stake in Charter on a fully diluted basis and also operates a telecommunications company in Alaska, according to Charter officials.
Some of Malone’s investments saw sharp declines as the pay-TV industry lost customers to streaming and other forms of video entertainment such as YouTube.
Before Monday’s announcement, Liberty Broadband was nearly 70% below its 2021 high. Other holdings, including Warner Bros. Discovery Inc. and Qurate Retail Class A, also posted sharp losses.
Under the terms of the proposal, investors who own Liberty Broadband common stock would receive 0.29 shares of Charter’s Class A stock tax-free for each share they now own, a value of more than $96 per share based on Charter’s closing price of $331.62.
According to a filing, Charter initially offered 0.228 shares per Liberty Broadband share.
“Liberty’s proposed transaction would streamline the dual corporate structure between Charter and Liberty Broadband, provide greater trading liquidity and strip Liberty Broadband of its existing management rights,” Greg Maffei, chief executive officer of Liberty Broadband, said in the statement.
Liberty Broadband’s Class A shares rose 20% to $73.50 in extended trading following the announcement. Charter shares lost less than 1%.
Under Liberty’s counterproposal, Charter would assume or refinance Liberty Broadband’s debt. Approval of the deal would require the consent of Liberty Broadband’s investors, who are not affiliated with Malone.
The proposed deal calls for a closing date of June 30, 2027, or earlier if the parties agree, Liberty said.
Malone recently restructured another of his investments: Sirius XM Holdings Inc. As part of the transaction, Sirius became an independent, publicly traded company, separate from Liberty Media.
(Updates Liberty Broadband’s charter share in third paragraph.)
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