Charter set to acquire Time Warner Cable for $55 billion

Charter Communications Inc is nearing an agreement to acquire Time Warner Cable Inc in a deal worth around $55 billion.

The company is expected to make an announcement on Tuesday.

The merger, which would combine the second and third largest US cable operators, represents further consolidation in an industry facing stagnating growth and new competition from services such as Netflix and Amazon Prime.

The deal is also a huge triumph for Charter, as last year it’s $61 billion bid to buy Time Warner Cable was rejected.

It follows an unsuccessful attempt by Comcast to acquire TWC for $45.2 billion, which was shot down by anti-trust regulators because of fears that the combined entity would have far too much control in the US broadband market.

Charter will pay roughly $195 per Time Warner Cable share in cash and stock, about 14 percent higher than TWC’s closing price.

The company is going to sell $5 billion worth of stock to Liberty Broadband to help finance the deal.

Charter Time Warner Acquisition

Charter’s $10 billion takeover of Bright House Networks

Charter is also acquiring a smaller competitor, Bright House Networks, for $10 billion, according to people with knowledge on the matter.

The acquisitions will give Charter a lot more clout and leverage

This acquisitions are set to give the Charter far more leverage when it comes to negotiations with content providers.

Charter’s customer base will quadruple to about 24 million through the two acquisitions, compared with Comcast’s 27 million.

More control of the US broadband market

According to data from MoffettNathanson, the combined entity would control just over 20 percent of the US broadband market.

It should be noted that one of the main reasons regulators were against the Comcast-TWC deal earlier this year was that if the two had merged the combined company would have ended up with around 40 percent of the US high-speed Internet market.

Charter is optimistic about receiving the green light from regulators

However, according to The Wall Street Journal, Charter hopes that regulators will view its bid more favorably. Apparently, last week, the Federal Communications Commission Chairman, Tom Wheeler, contacted the chief executives of the two companies to say that the agency is not against any and all cable deals.

Video – What is takeover?

This short Market Business News video explains what an acquisition (takeovers) is, and why it is not the same as a merger.