Charter Communications and Cox Communications, two of the largest cable companies in the United States, have announced a significant merger agreement that is poised to reshape the cable industry. This major deal is one of the largest in the sector and across corporate America in the past year.
The merger values Cox at an impressive $34.5 billion on an enterprise basis. This valuation is comprised of $21.9 billion in equity and $12.6 billion in net debt and other obligations. This valuation aligns closely with Charter's recent enterprise value based on projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025, as highlighted in a recent news release.
Following the announcement, Charter, the second-largest publicly traded cable company after Comcast, saw an increase in premarket trading from its previous close of $419.57. Meanwhile, Cox Communications, which remains privately run by the Cox family, is also recognized as one of the largest cable providers in the country.
Upon completion of the merger, Cox Enterprises will retain approximately 23% of the fully diluted shares outstanding in the combined entity. The newly merged company plans to undergo a rebranding, adopting the name Cox Communications within a year after the deal's closure. Charter's existing brand, Spectrum, which encompasses its cable, broadband, and mobile services, will evolve to become the consumer-facing brand for all customers under this merger.
The headquarters of the combined company will be located in Stamford, Connecticut, which is currently Charter's base of operations. However, there will also be a significant operational presence in Atlanta, the home base of Cox Communications.
Charter's CEO, Chris Winfrey, will continue to lead the combined entity as president and CEO after the merger. Additionally, Alex Taylor, the chairman and CEO of Cox Enterprises, will assume the role of chairman for the new board of the merged company. Another executive from Cox will join the board, and the Cox family will have the right to maintain two board positions.
This merger with Cox follows closely on the heels of Charter's announcement regarding its acquisition of Liberty Broadband in an all-stock deal, which aims to streamline the portfolio of cable magnate John Malone. In February, stockholders from both Charter and Liberty Broadband approved this proposed acquisition.
According to the latest updates, the merger agreement with Cox is anticipated to finalize concurrently with the Liberty Broadband acquisition. As this story develops, further updates will be provided.
Disclosure: Comcast is the parent company of CNBC.
