Charter Communications, Inc. (NASDAQ: CHTR) and Liberty Broadband Corporation (NASDAQ: LBRDA) announced yesterday that they have entered into a definitive agreement under which Charter has agreed to acquire Liberty Broadband in an all-stock transaction. According to Jonathan Chaplin of NewStreet Research, Charter is not acquiring Liberty’s subsidiary, GCI, making it “a very straightforward transaction in which Charter is effectively repurchasing their own shares at a discount.”
Under the terms of the agreement, each holder of Liberty Broadband Series A common stock, Series B common stock, and Series C common stock will receive 0.236 of a share of Charter common stock per share of Liberty Broadband common stock held, with cash to be issued in lieu of fractional shares. The repurchase of shares at a discount, Chaplin said, should boost Charter’s value by eight percent; however, he noted the transaction was “widely anticipated.”
Each holder of Liberty Broadband Series A stock will receive one share of newly issued Charter cumulative redeemable preferred stock per share of Liberty Broadband preferred stock.
Liberty Broadband’s principal assets currently consist of approximately 45.6 million common shares of Charter and its subsidiary GCI, LLC, one of Alaska’s largest communications providers. Liberty Broadband has agreed to spin off its GCI business by way of a distribution to the stockholders of Liberty Broadband prior to the closing of the acquisition of Liberty Broadband by Charter. The companies currently expect the transaction to close on June 30, 2027, unless otherwise agreed, subject to the completion of the GCI spin-off and other customary closing conditions.
As a result of the transaction, Charter expects to retire the approximately 45.6 million Charter shares currently owned by Liberty Broadband and to issue approximately 34.0 million shares to holders of Liberty Broadband common stock at the closing, resulting in a net decrease of approximately 11.5 million Charter shares outstanding. Liberty Broadband has existing debt of $2.6 billion (excluding debt at GCI) that will be repaid prior to closing or assumed by Charter, and $180 million of preferred equity that will become Charter preferred equity following the close of the transaction.
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