STAMFORD, Conn., NEW YORK and SYRACUSE, N.Y., May 26,
2015 /PRNewswire/ -- Charter Communications, Inc.
(Nasdaq: CHTR) (together with its subsidiaries "Charter") and Time
Warner Cable Inc. (NYSE: TWC) today announced that they have
entered into a definitive agreement for Charter to merge with Time
Warner Cable. The deal values Time Warner Cable at $78.7 billion. Charter will provide $100.00 in cash and shares of a new public parent
company ("New Charter") equivalent to 0.5409 shares of CHTR for
each Time Warner Cable share outstanding. The deal values each Time
Warner Cable share at approximately $195.71 based on Charter's market closing price
on May 20, or approximately
$200 based on Charter's 60-trading
day volume weighted average price. In addition, Charter will
provide an election option for each Time Warner Cable stockholder,
other than Liberty Broadband Corporation ("Liberty Broadband") or
Liberty Interactive Corporation, who will receive all stock, to
receive $115.00 of cash and New
Charter shares equivalent to 0.4562 shares of CHTR for each Time
Warner Cable share they own.
![Charter Communications Logo. Charter Communications Logo.](http://photos.prnewswire.com/prnvar/20110526/AQ10195LOGO)
In addition, Charter and Advance/Newhouse Partnership (a parent
of Bright House Networks, LLC) today announced that the two
companies have amended the agreement which the two parties signed
and announced on March 31, 2015,
whereby Charter will acquire Bright House Networks ("Bright House")
for $10.4 billion. That agreement, as
amended, provides for Charter and Advance/Newhouse to form a new
partnership (the "Partnership") of which New Charter will own
between approximately 86% and 87% and of which Advance/Newhouse
will own between approximately 13% and 14%, depending on the Time
Warner Cable shareholders' cash election option described above.
The consideration to be paid to Advance/Newhouse by Charter will
include common and convertible preferred units in the Partnership,
in addition to $2 billion in cash.
The common and convertible preferred partnership units will each be
exchangeable into shares of New Charter. The
Charter-Advance/Newhouse transaction is expected to close
contemporaneously with the Charter-Time Warner Cable
transaction.
Charter also announced today that Liberty Broadband Corporation
("Liberty Broadband") has agreed to purchase, upon closing of the
Time Warner Cable transaction, $4.3
billion of newly issued shares of New Charter at a price
equivalent to $176.95 per Charter
share, which represents Charter's closing price as of May 20, 2015. As previously-announced, Liberty
Broadband will also purchase, upon closing of the
Charter-Advance/Newhouse transaction, $700
million of newly issued Charter shares at a price equivalent
to $173.00 per Charter share.
Following the close of both the Charter-Time Warner Cable and
the Charter-Advance/Newhouse transactions, and depending on the
outcome of the cash election feature offered in the Charter-Time
Warner Cable transaction, Time Warner Cable shareholders, excluding
Liberty Broadband and its affiliates, are expected to own between
approximately 40% and 44%1 of New Charter, and
Advance/Newhouse is expected to own between approximately 13% and
14% of New Charter. Liberty Broadband is expected to own between
approximately 19% and 20% of New Charter.
The combination of Charter, Time Warner Cable and Bright House
will create a leading broadband services and technology company
serving 23.9 million customers in 41 states. The announced
transactions will drive investment into the combined entity's
advanced broadband network, allow for wider deployment of new
competitive facilities based WiFi networks in public places, and
the footprint expansion of optical networks to serve the large
marketplace of small and medium sized businesses. This will
result in faster broadband speeds, better video products, including
more high definition channels, more affordable phone service and
more competition, for consumers and businesses. The scale of the
new entity will also result in greater product innovation, bringing
new and advanced services to consumers and businesses, including
Charter's Spectrum Guide and World Box and other product
innovations. And Charter's commitment to superior products and
outstanding customer service, and its strategy of investing in
insourcing and returning offshore jobs to America, will not only
benefit the combined companies' customers, but will also enhance
opportunities for employees of the new company.
"The teams at Charter, Time Warner Cable and Bright House
Networks are filled with the innovators of our industry.
Representatives of each of these companies have invented some of
the most revolutionary communications products ever created;
innovations like video on demand, VOIP phone service, remote
storage DVR, cable TV through an app, downloadable security and the
first backward-compatible, cloud-based user interface. That spirit
of innovation will live on, and it will create real benefits and
great long-term value for the customers, shareholders and employees
of all three companies," said Tom
Rutledge, President and CEO of Charter Communications. "With
our larger reach, we will be able to accelerate the deployment of
faster Internet speeds, state-of-the-art video experiences, and
fully–featured voice products, at highly competitive prices. In
addition, we will drive greater competition through further
deployment of new competitive facilities-based WiFi networks in
public places, and the expansion of the facilities footprint of
optical networks to serve the large, small and medium sized
business services marketplace. New Charter will capitalize on
technology to create and maintain a more effective and efficient
service model. Put simply, the scale of New Charter, along with the
combined talents we can bring to bear, position us to deliver a
communications future that will unleash the full power of the
two-way, interactive cable network."
"With today's announcement, we have delivered on our commitment
to maximizing shareholder value," said Robert D. Marcus, Chairman and CEO of Time
Warner Cable. "This agreement recognizes the unique value of Time
Warner Cable, and brings together three great companies that share
a common philosophy of strong operations, great products, robust
network investment and putting customers first. This combination
will only accelerate the great operating momentum we've seen over
the last year and provide enormous opportunities for our 55,000
dedicated employees. We remain wholly committed to bringing the
very best experience to our residential and business customers
coast to coast."
"Today's announcement is good news for customers and potential
customers, as well as our employees, since we will be in a stronger
position to deliver competitive services, invest in advanced
technology, and develop innovative products that will compete with
global and national brands," said Steve
Miron, Chief Executive Officer of Bright House
Networks. "In addition, I am very pleased that Tom Rutledge will be the CEO of the new
company. Tom recognizes the importance of placing a high
priority focus on customer care drawing from the expertise of all
three companies, and I believe this will be a strong pillar of the
new company's culture."
New Charter will be led by Tom
Rutledge, who will serve as President and CEO. Additionally,
Mr. Rutledge will be offered a new five-year employment agreement.
At the close of the transactions, New Charter's Board of Directors
will consist of 13 directors including Mr. Rutledge, who will be
offered the position of Chairman. The remaining 12 directors will
include seven independent directors nominated by the independent
directors serving on Charter's Board of Directors, two directors
designated by Advance/Newhouse, and three directors designated by
Liberty Broadband. Charter's current Chairman since 2009,
Eric Zinterhofer, will continue to
serve on New Charter's Board.
Pursuant to the agreement between Charter and Advance/Newhouse,
Charter and Advance/Newhouse will form the Partnership utilizing an
existing subsidiary of Charter Communications Holding Company, LLC,
a subsidiary of Charter. New Charter, which will include Time
Warner Cable, will contribute substantially all of its assets into
the Partnership, and Advance/Newhouse will contribute all of Bright
House's assets into the Partnership. In exchange for its
contribution, Advance/Newhouse will receive $5.9 billion of exchangeable common partnership
units, and $2.5 billion of
convertible preferred partnership units which will pay a 6% coupon.
The common and convertible preferred partnership units will each be
exchangeable into New Charter Class A common stock, with 34.3
million common units priced at $173.00 (the "Reference Price") per share, as
previously announced. The 10.3 million preferred partnership units
will be convertible at $242.19, a 40%
premium to the Reference Price. Advance/Newhouse will also receive
$2 billion in cash and will receive
governance rights reflecting its economic ownership in the
partnership through a new class of shares at New Charter.
Upon closing of the Charter-Advance/Newhouse transaction, a new
shareholder's agreement (the "Shareholder's Agreement") with
Advance/Newhouse and Liberty Broadband will become effective. Under
the new agreement, Advance/Newhouse and Liberty Broadband will be
granted preemptive rights, allowing each to maintain their pro rata
ownership in New Charter. The Shareholder's Agreement also provides
for voting caps and required participation in buybacks at specified
acquisition caps, and stipulates transfer restrictions among other
shareholder governance matters. In connection with the
Charter-Advance/Newhouse transaction as amended, Advance/Newhouse
has agreed to grant Liberty Broadband a voting proxy on its shares,
capped at 7%, for the five years following the close of the
transaction, such that Liberty Broadband would have total voting
power of approximately 25% at closing. The proxy excludes votes on
certain matters.
The Charter-Time Warner Cable transaction is subject to approval
by both Charter and Time Warner Cable shareholders, regulatory
review, and other customary conditions. The
Charter-Advance/Newhouse transaction is subject to several
conditions, including the completion of the Time Warner Cable
acquisition (subject to certain exceptions if Time Warner Cable
enters into another sale transaction) and a separate vote on the
Liberty transactions, and regulatory approval. The three companies
expect to close the announced transactions by the end of 2015.
Goldman Sachs and LionTree Advisors are serving as lead
financial advisors to Charter in connection with the Time Warner
Cable transaction. Guggenheim Securities is also a financial
advisor to Charter. BofA Merrill Lynch and Credit Suisse are also
financial advisors to Charter, and together with Goldman Sachs and
UBS Investment Bank, are leading the financing for the transaction.
The law firms Wachtell, Lipton, Rosen & Katz is counsel to
Charter and Kirkland & Ellis LLP is representing Charter as
financing counsel.
Goldman Sachs and LionTree Advisors are serving as financial
advisors to Charter in connection with the Bright House
transaction. Wachtell, Lipton, Rosen & Katz is acting as
counsel to Charter and Kirkland & Ellis LLP is advising Charter
on financing.
Morgan Stanley, Allen & Company, Citigroup and Centerview
Partners are financial advisors to Time Warner Cable and its Board
of Directors, and Paul, Weiss, Rifkind, Wharton & Garrison LLP,
Latham & Watkins LLP and Skadden, Arps, Slate, Meagher &
Flom LLP are legal advisors.
UBS Investment Bank is serving as exclusive financial advisor to
Advance/Newhouse Partnership and Bright House Networks LLC, and
Sabin, Bermant & Gould LLP and Sullivan & Cromwell LLP are
acting as legal advisors.
Teleconference and Webcast for Financial Community
Charter and Time Warner Cable will host a conference call on
Tuesday, May 26, 2015 at 8:00 a.m. Eastern Time (ET) related to the
contents of this release.
The conference call will be webcast live via Charter's website
at ir.charter.com and Time Warner Cable's website at
twc.com/investors.
Those participating via telephone should dial 866-919-0894 no
later than 10 minutes prior to the call. International participants
should dial 706-679-9379. The conference ID code for the call is
54712821. A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on June 26,
2015. The conference ID code for the replay is 54712821.
1 Legacy Time Warner Cable shareholder stake in New
Charter excludes Liberty Broadband Corporation's current share
ownership in Time Warner Cable.
About Charter
Charter (NASDAQ: CHTR) is a
leading broadband communications company and the fourth-largest
cable operator in the United
States. Charter provides a full range of advanced broadband
services, including advanced Charter Spectrum TV® video
entertainment programming, Charter Spectrum Internet® access, and
Charter Spectrum Voice®. Spectrum Business similarly provides
scalable, tailored, and cost-effective broadband communications
solutions to business organizations, such as business-to-business
Internet access, data networking, business telephone, video and
music entertainment services, and wireless backhaul. Charter's
advertising sales and production services are sold under the
Charter Media® brand. More information about Charter can be found
at charter.com.
About Time Warner Cable
Time Warner Cable Inc.
(NYSE: TWC) is among the largest providers of video, high-speed
data and voice services in the United
States, connecting 15 million customers to entertainment,
information and each other. Time Warner Cable Business Class offers
data, video and voice services to businesses of all sizes, cell
tower backhaul services to wireless carriers and enterprise-class,
cloud-enabled hosting, managed applications and services. Time
Warner Cable Media, the advertising sales arm of Time Warner Cable,
offers national, regional and local companies innovative
advertising solutions. More information about the services of Time
Warner Cable is available at www.twc.com, www.twcbc.com and
www.twcmedia.com.
About Bright House Networks
Bright House
Networks is the sixth largest owner and operator of cable systems
in the U.S. and the second largest in Florida, with technologically advanced systems
located in five states including Florida, Alabama, Indiana, Michigan and California and two of the top 20 DMAs. Bright
House Networks serves approximately 2.5 million customers who
subscribe to one or more of its video, high-speed data, home
security and automation and voice services. Bright House Networks
Business Solutions offers a strong portfolio of video, voice, data,
and cloud-based solutions to the small and medium business
segments. In addition, Bright House Networks Enterprise Solutions
provides advanced, fiber-based telecommunication services to key
industry verticals in the mid-market and carrier segments,
including cloud-based hosted voice, managed security, and cell
backhaul to wireless carriers. The company is Cisco®
Master Service Provider-certified under the Cisco Cloud and Managed
Service Program, the first cable operator in the United States to achieve this designation.
Bright House Networks also owns and operates exclusive,
award-winning, local news and sports channels in its Florida markets. For more information about
Bright House Networks, or our products and services, visit
brighthouse.com.
Important Information For Investors And
Shareholders
This communication does not constitute an
offer to sell or the solicitation of an offer to buy any securities
or a solicitation of any vote or approval. In connection with the
transactions referred to in this material, Charter Communications,
Inc. ("Charter"), expects to file a registration statement on Form
S-4 with the Securities and Exchange Commission ("SEC") containing
a preliminary joint proxy statement of Charter and Time Warner
Cable, Inc. ("Time Warner Cable") that also constitutes a
preliminary prospectus of Charter. After the registration statement
is declared effective Charter and Time Warner Cable will mail a
definitive proxy statement/prospectus to stockholders of Charter
and stockholders of Time Warner Cable. This material is not a
substitute for the joint proxy statement/prospectus or registration
statement or for any other document that Charter or Time Warner
Cable may file with the SEC and send to Charter's and/or Time
Warner Cable's stockholders in connection with the proposed
transactions. INVESTORS AND SECURITY HOLDERS OF CHARTER AND TIME
WARNER CABLE ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to obtain
free copies of the proxy statement/prospectus (when available) and
other documents filed with the SEC by Charter or Time Warner Cable
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Charter will be
available free of charge on Charter's website at charter.com, in
the "Investor and News Center" near the bottom of the page, or by
contacting Charter's Investor Relations Department at 203-905-7955.
Copies of the documents filed with the SEC by Time Warner Cable
will be available free of charge on Time Warner Cable's website at
http://ir.timewarnercable.com or by contacting Time Warner Cable's
Investor Relations Department at 877-446-3689.
Charter and Time Warner Cable and their respective directors and
certain of their respective executive officers may be considered
participants in the solicitation of proxies with respect to the
proposed transactions under the rules of the SEC. Information about
the directors and executive officers of Charter is set forth in its
Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC
on February 24, 2015, and its proxy
statement for its 2015 annual meeting of stockholders, which was
filed with the SEC on March 18, 2015.
Information about the directors and executive officers of Time
Warner Cable is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2014, which
was filed with the SEC on February 13,
2015, as amended April 27,
2015 and its proxy statement for its 2015 annual meeting of
stockholders, which was filed with the SEC on May 18, 2015.These documents can be obtained free
of charge from the sources indicated above. Additional information
regarding the participants in the proxy solicitations and a
description of their direct and indirect interests, by security
holdings or otherwise, will also be included in any proxy statement
and other relevant materials to be filed with the SEC when they
become available.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this communication
regarding the proposed transaction between Charter and Time Warner
Cable and the proposed transaction between Bright House and
Charter, including any statements regarding the expected timetable
for completing the transaction, benefits and synergies of the
transaction, future opportunities for the respective companies and
products, and any other statements regarding Charter's, Time Warner
Cable's and Bright House's future expectations, beliefs, plans,
objectives, financial conditions, assumptions or future events or
performance that are not historical facts are "forward-looking"
statements made within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These statements are often, but not
always, made through the use of words or phrases such as "believe,"
"expect," "anticipate," "should," "planned," "will," "may,"
"intend," "estimated," "aim," "on track," "target," "opportunity,"
"tentative," "positioning," "designed," "create," "predict,"
"project," "seek," "would," "could", "potential," "continue,"
"ongoing," "upside," "increases," and "potential," and similar
expressions. All such forward-looking statements involve estimates
and assumptions that are subject to risks, uncertainties and other
factors that could cause actual results to differ materially from
the results expressed in the statements. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking statements are the following: the
timing to consummate the proposed transactions; the risk that a
condition to closing the proposed transactions may not be
satisfied; the risk that a regulatory approval that may be required
for the proposed transactions is not obtained or is obtained
subject to conditions that are not anticipated; Charter's ability
to achieve the synergies and value creation contemplated by the
proposed transactions; Charter's ability to promptly, efficiently
and effectively integrate acquired operations into its own
operations; and the diversion of management time on
transaction-related issues. Additional information concerning these
and other factors can be found in Charter's and Time Warner Cable's
respective filings with the SEC, including Charter's and Time
Warner Cable's most recent Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Charter and
Time Warner Cable assume no obligation to update any
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only
as of the date hereof.
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SOURCE Charter Communications, Inc.