Charter, the telecommunications company, announced on Friday (May 16) that it has agreed to acquire Cox for $34.5 billion. This move will merge two major cable television operators in the United States, expanding their business footprint from the New York area to southern cities like Atlanta.
Currently, cable television operators are facing increasing pressure as more viewers are choosing to abandon cable TV in favor of streaming services.
According to the statement released on Friday, the equity valuation of Cox in this deal is $21.9 billion, with an additional $12.6 billion in net debt and other liabilities, bringing Cox’s enterprise valuation to $34.5 billion. Both companies stated that this transaction will bring employment opportunities to the United States, “bringing overseas jobs back to the country and creating new high-paying jobs for American employees.”
Founded 127 years ago, the Atlanta-based family business Cox will retain its name even after the merger, with plans to rename the merged company as Cox Communications within a year of the completion of the merger.
Friday’s deal includes only Cox’s communication assets owned by the family, such as Axios and media assets like the Atlanta Journal Constitution. As part of the transaction, Cox shareholders will receive $11.9 billion in equity, $6 billion in convertible bonds, and $4 billion in cash. After the deal is finalized, Cox shareholders will hold approximately 23% of the combined company.
This merger is the latest move in the industry integration taken by billionaire cable TV investor and Charter shareholder John Malone.
Like most multi-billion-dollar deals in the cable and wireless sectors, the merger of Charter and Cox may be subject to antitrust review by the Department of Justice and other federal regulatory agencies. The agreement also needs to meet other customary closing conditions, including obtaining approval from Charter shareholders, as Charter is a publicly traded company with a market capitalization of nearly $60 billion.
Malone previously announced plans to merge Charter with Liberty Broadband, the largest investor in broadband operator Spectrum. The acquisition of Cox will be completed in sync with the acquisition of Liberty, as Liberty has agreed to vote in support of this merger.
Currently, Charter provides cable television and broadband services to 57 million households in 41 states across the United States and owns network infrastructure covering over 30 states and serving 12 million households and businesses.
Upon completion of the transaction, the merged company’s wireless, cable, and broadband networks will cover 46 states in the U.S., servicing nearly 70 million households and 38 million business users. The new company is poised to surpass Comcast and become the largest cable TV provider in the United States.