John Malone-controlled Liberty Media has agreed to buy a 27.3% stake in US cableco Charter Communications for US$2.62bn from private equity firms.
Apollo Management, Oaktree Capital Management and Crestview Partners have sold 26.9 million shares and 1.1…
John Malone-controlled Liberty Media has agreed to buy a 27.3% stake in US cableco Charter Communications for US$2.62bn from private equity firms.
Apollo Management, Oaktree Capital Management and Crestview Partners have sold 26.9 million shares and 1.1 million warrants to Liberty for US$95.50 per share.
The announcement follows reports yesterday that sent Charter’s share price soaring by 11% in trading. It eventually closed up by 9.6% for the day.
Liberty said it will fund the purchase with cash on hand and new loan arrangements.
At the end of 2012 Apollo, Oaktree and Crestview held 23.6%, 12% and 10.1% stakes respectively. Upon closing it was disclosed that Crestview and Oaktree will hold approximately 7.4% and 2.2% in Charter respectively, which suggests Apollo sold roughly 13.8% of its stake.
Liberty has agreed to not increase its stake in Charter above 35% until January 2016, and 39.99% thereafter.
In a joint statement Liberty and Charter said they expect the transaction to close in the first half of Q2, subject to conditions.
Liberty will receive four seats on Charter’s board and its chairman John Malone is expected to occupy one of them.
Liberty was advised by LionTree Advisors and Baker Botts. Charter was advised by Kirkland & Ellis. Apollo was advised by Citi and Wachtell, Lipton, Rosen & Katz. Oaktree was advised by Citi, Goldman Sachs and Paul, Weiss, Rifkind, Wharton & Garrison. Crestview was advised by Davis Polk & Wardwell.
For 2012 Charter reported revenues of US$7.5bn, EBITDA of US$2.7bn and debts of US$12.9bn.
John Malone’s cable interests have been focused outside of the US since he sold Tele-Communications Inc. to AT&T in 1998 for an enterprise value of US$48bn. Liberty Media does not hold any cable assets and media is its core business.
His Liberty Global business has a focus on European telecoms and agreed a deal to buy British cableco Virgin Media in February for US$23.2bn.
