Source Credit : CNBC
Charter Communications and Cox Communications, two of the largest cable providers in the United States, have reached an agreement to merge. This transaction is poised to be one of the most significant in the telecommunications sector, as well as across the broader corporate landscape, in the past year.
The agreement establishes an enterprise valuation for Cox at $34.5 billion, which includes $21.9 billion in equity and $12.6 billion in net debt and other obligations. This valuation aligns with Charter's recent enterprise value assessment, which is based on estimated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2025, as detailed in a news release issued on Friday.
Shares of Charter Communications, the second-largest publicly traded cable company after Comcast, experienced a modest increase on Friday. Meanwhile, Cox Communications, which is privately owned by the Cox family, ranks among the largest cable providers in the industry as well.
On a Friday call with investors, Charter CEO Chris Winfrey called the deal “good for America” and said it will “return jobs from overseas and create new, good paying customer service and sales careers.”
Following Donald Trump's election victory, Wall Street experienced a significant rally, as many anticipated a relaxation of regulatory constraints that would benefit dealmakers and corporate leaders. However, in the months that ensued, companies have faced a myriad of challenges beyond mere deal-making. Notably, the Federal Communications Commission's investigation into diversity, equity, and inclusion practices, along with the implications of Trump's tariffs, have emerged as critical factors influencing corporate strategies and operations.
Last fall, telecommunications leader Verizon announced its intention to acquire Frontier Communications for a proposed sum of $20 billion. However, the transaction has not yet received regulatory approval, as Verizon is currently under investigation regarding its diversity, equity, and inclusion (DEI) practices.
The merger with Cox follows closely on the heels of Charter's announcement regarding its acquisition of Liberty Broadband in an all-stock transaction designed to streamline the portfolio of cable industry pioneer John Malone. In February, shareholders of both Charter and Liberty Broadband granted their approval for this strategic deal.
According to the announcement, Charter anticipates achieving approximately $500 million in annualized cost synergies within three years following the completion of the transaction.
The companies announced on Friday that the merger agreement with Cox is anticipated to close concurrently with the Liberty Broadband merger. During the call, Winfrey acknowledged the challenges in precisely determining the timeline, stating, "While it is difficult to specify exact timing, we believe this could occur within the next year, potentially by mid-year. However, we will closely adhere to the guidance of regulators and collaborate with them in a constructive manner."
