John Malone’s, Liberty Media Corp. announced yesterday that it will invest $2.617 billion in Charter Communications, Inc., which will give the Douglas County-based conglomerate 27.3 percent state in the US cable company. This announcement came one day after the Wall Street Journal reported that Liberty Media was close to buying into Charter, the fourth-largest cable provider in the US.
On March 18, 2013, WST reported that two private equity investors in the Stamford, Connecticut-based Charter, Appollo Investment Funds and Oaktree Opportunities Investments LP, announced on March 7 that they would sell 9.3 million of combined shares of Charter common stock. This represents approximately 9 percent of Charter’s outstanding shares. On March 12, Charter reported that the funds’ stock sale was completed.
Yesterday, it was reported that a definitive agreement has been reached between Malone’s company and investment funds that manage or are connected with Charter, Appollo Management, Oaktree Capital Management, and Crestview Partners to purchase approximately 26.9 shares and 1.1 million warrants in Charter. Shares will be purchased at $95.50 per share.
In this deal, Charter agreed to give Liberty Media the power to appoint as many as four directors to the board of directors. Malone, Gregory Maffei (president & CEO of Liberty Medial), Nair Balan (executive vice president and CTO of Liberty Global), and Michael Huseby, CFO of Barnes & Noble will be named to the board of directors for Chater.
Charter operates on the West Coast, in the Southeast, Midwest, and New England offering cable TV, internet, and other services. If Liberty Media buys a big stake in Charter, it would represent a return by Malone to the US cable industry.
Malone, the founder and chairman of Liberty Media, once led a company that became the largest US cable TV system operator in the late 1990s, TeleCommunications, Inc. TCI was bought by AT&T in 1999. In 2001, the programming arm of TCI was spun off by AT&T with Malone its chairman and controlling shareholder to become an independent public company.
Liberty Media has holdings of approximately a one percent stake in New York City-based Time Warner Cable, Inc., the second-largest cable company in the nation. Malone is also a shareholder and chairman of another company on the Liberty campus, Liberty Global, Inc. an international cable TV giant. Liberty Global operates mostly in Europe and is the world’s second-largest cable company. Liberty Global is in the middle of a deal valued at $23.3 billion to buy British cable company Virgin Media, which would make Liberty Global, the largest cable company in the world.
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