Charter Communications completed its previously announced transaction with Cox Communications and its acquisition of Liberty Broadband Corporation. Charter said the combined company will have an expanded 45-state Spectrum footprint.
Share issuance and ownership terms
Charter issued the equivalent of just over 46 million Charter shares to a subsidiary of Cox Enterprises. Cox Enterprises and its subsidiaries now own approximately 26% of the combined entity’s fully diluted shares outstanding on an as-converted, as-exchanged basis.
Approximately $12 billion of Cox debt and finance leases will remain outstanding at Charter subsidiaries as a result of the transaction. Charter also assumed approximately $840 million of Liberty Broadband net debt that will be repaid shortly after closing, plus $180 million of preferred equity that became Charter preferred equity at close.
How Liberty Broadband holders were treated
Each holder of Liberty Broadband common stock received 0.236 of a share of Charter common stock for each Liberty Broadband common share held, with cash paid instead of fractional shares. Each holder of Liberty Broadband Series A cumulative redeemable preferred stock received one newly issued share of Charter preferred stock for each preferred share held.
Charter retired approximately 38.6 million Charter shares previously owned by Liberty Broadband and issued approximately 33.9 million shares to Liberty Broadband common stockholders at closing, resulting in a net decrease of approximately 4.7 million Charter shares outstanding.
Rollout terms for Cox customers and businesses
Spectrum is offering a free year of mobile service to Cox internet customers who do not already subscribe to Cox Mobile. In mid-September, Spectrum plans to launch its full suite of products to all consumers, including existing customers, in former Cox markets.
Within the next year, Cox customers will benefit from Spectrum’s customer service commitments. Over the next 18 months, Spectrum will apply its sales and service workforce model to Cox markets and fully return Cox’s customer service function to the United States. All employees will earn a starting wage of at least $20 per hour and receive Spectrum’s benefits.
Board changes and corporate structure
Alex Taylor was appointed chairman of Charter’s board and Eric Zinterhofer was named lead independent director. Cox Enterprises appointed Dallas Clement and Mark Greatrex to Charter’s 13-member board.
Liberty Broadband ceased to be a direct shareholder in Charter and no longer designates directors for election to the Charter board. Within a year after the transaction, the company will change its parent company name to Cox Communications but continue to operate as Spectrum across all markets. The company will remain headquartered in Stamford, Connecticut, while keeping a significant presence in Atlanta, Georgia.
What this means for enterprise and local units
Spectrum Business and Cox Business will be combined across the Spectrum footprint, including Segra and RapidScale. Spectrum established the Spectrum Foundation with an initial $50 million investment, and Spectrum Networks has more than 35 stations across the company’s footprint.
The company also said Spectrum Networks will expand into the Cox footprint in the coming months. That adds a local-news and advertising footprint change to the broader integration work already disclosed.