Time Warner Cable Inc (TWC.N) is nearing an agreement to be acquired by smaller peer Charter Communications Inc (CHTR.O) for about $55 billion, combining the second and third largest U.S. cable operators, people familiar with the matter said on Monday.
The cash and stock deal values Time Warner Cable at $195 per share, according to the sources, and comes just one month after Comcast Corp (CMCSA.O) dropped its $45.2 billion merger agreement with Time Warner Cable, clinched in February 2014, over antitrust concerns.
Time Warner Cable shares closed Friday at $171.18.
The new deal, and the friendly negotiations that preceded it, are in sharp contrast to the acrimonious exchanges in 2013 and early 2014 that ended with Time Warner Cable's rejecting unsolicited approaches by Charter and instead finding a white knight in Comcast.
The agreement represents a victory for media mogul John Malone, whose Liberty Broadband Corp (LBRDA.O) is Charter's largest shareholder. Liberty is supporting the deal by acquiring $5 billion in new Charter stock, one of the people said.
Time Warner Cable shareholders will have an option on the amount of the $195 per share acquisition price to be paid in cash: able to take either $100 or $115 in cash, and the balance in Charter stock, one of the people said.
The deal is expected to be announced on Tuesday. Charter will also acquire Bright House Networks, the sixth-largest U.S. cable operator, for $10.4 billion, the people added. Charter and Bright House had extended their merger talks after Comcast's deal with Time Warner Cable fell through. Charter's previous agreement with Bright House was contingent on Comcast's completion of the buyout of Time Warner Cable.
The sources asked not to be identified ahead of any official announcement. Time Warner Cable declined to comment, while Charter, Bright House and Altice did not immediately respond to requests for comment.
The combined companies could have as many as 23 million customers, just behind Comcast's 27.2 million customers. Charter Chief Executive Tom Rutledge is expected to be CEO of the combined entity.
Charter was competing for Time Warner Cable against French telecommunications group Altice SA (ATCE.AS), which last week agreed to buy U.S. regional cable company Suddenlink Communications for $9.1 billion from private equity investors, making its first move across the Atlantic.
Charter asked for deal negotiations with Time Warner Cable to be speeded up after Altice expressed its interest, one of the people said. Altice did not have enough time to address all of Time Warner Cable's concerns over a merger between the two of them, that person added.
Bloomberg first reported on the deal.
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