Charter Communications, the US cable operator, is set to expand its network by acquiring smaller rival Cox Communications in a deal worth $35 billion. The merger includes net debt and will create the largest US cable provider with 38 million customer relationships.
Under terms of the deal, Charter will pay $4 billion in cash and nearly 34 million partnership shares worth about $12 billion. Cox shareholders will receive $4 billion in cash, $6 billion of convertible preferred units paying a 6.875% coupon, and 33.6 million common shares with an implied value of $11.9 billion.
The acquisition is seen as a strategic move to counter the growing competition from video streamers like YouTube and mobile providers offering WiFi services. Charter expects to generate around $500 million in annual cost savings within three years of the deal closing, which will boost its bottom line.
The deal has been advised by Citi, LionTree, Allen & Co., BDT & MSD Partners, Evercore, and Wells Fargo. Regulatory approvals are not guaranteed due to concerns from antitrust authorities, but Charter believes the acquisition will be beneficial in the long run, providing a valuable extension cord in an increasingly competitive industry.
The acquisition will see Cox Enterprises owning about 23% of the combined company, with Charter’s weighted average cost of capital around 7.5%. Industry analysts expect synergies to yield an 8% return on investment from the enterprise.
Source: https://www.reuters.com/breakingviews/charter-deal-runs-valuable-35-bln-extension-cord-2025-05-16