Liberty Media Corp. (NASDAQ: LMCA) announced on Tuesday that it has agreed to acquire 27.3% stake in the cable TV provider, Charter Communications Inc. (NASDAQ: CHTR) in a deal estimated at $2.62 billion or $95.50 a share, which represents a discount of 3% on Charter’s closing stock price as of Monday March 18th.
The deal is expected to close by first half of the second quarter of the current year and Liberty expects to fund the deal with a combination of cash on hand and loans.
Charter Communications is engaged in providing cable, internet and phone services to over 5 million customers in 25 states.
According to the deal, Liberty Communications will be allowed to nominate four people for the Charter’s board.
The decision to partially acquire stake in Charter Communications comes at a time when Liberty Media has made quite few changes in its investment portfolio. Earlier in January, Liberty Media decided to spin off its Starz TV channel subsidiary and increased its stake in satellite radio company Sirius XM Radio Inc to more than 50%. Besides, the Company also boosted its stake in Nation Entertainment Inc, a concert promoter to 27%.
As a part of the deal, Liberty will not be able to raise its stake in Charter for more than 35% until January 2016 and over 39.99% after this period.
In addition, Liberty Media has also agreed to not wrangle for additional spots at Charter’s board until 2015 shareholders’ meeting and will continue desisting from doing that so long as its chosen nominees are allowed to represent in Charter’s board or until the agreement is terminated.
Shares of Liberty Media traded marginally lower while shares of Charter Communications gained about 2%, by afternoon trade.
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