Charter offered $195.71 in cash and stock per share for telecoms giant, based on Charters’ closing price on May 20. The deal values Time Warner Cable at $78.7 billion including debt, according to Thomson Reuters data. As part of the agreement, Charter will also acquire the smaller, privately held cable provider Bright House Networks for $10.4 billion.
The proposed merger will be subjected to intense regulatory scrutiny. Last month Comcast, the industry’s market leader, walked away from a $45 billion deal to buy Time Warner Cable due to regulatory concerns. That proposed deal did not include a break up fee – paid by the potential buyer should the deal collapse. However, if Charter’s deal for Time Warner Cable collapses, the company will be required to pay $2 billion.
The Federal Communications Commission, which will decide if the deal is the interests of the American public, has already stated it will closely review the proposal. “The FCC reviews every merger on its merits and determines whether it would be in the public interest. In applying the public interest test, an absence of harm is not sufficient. The Commission will look to see how American consumers would benefit if the deal were to be approved,” FCC Chairman Tom Wheeler said in a statement.
The two companies have already made efforts to convince regulators that the deal is different from the doomed Comcast merger. “This is a very different transaction,” Time Warner Cable CEO Robert Marcus said on a call with analysts Tuesday morning. “We’re talking about a resulting entity that’s significantly smaller…We’re confident it’s going to get done.”
One of the big differences between the two deals will be the number of internet customers owned by the combined entity. Charter and Time Warner Cable combined will serve around 19 million internet customers, significantly less than the 35 million a combination of Comcast and Time Warner Cable would have served.
On the same call, Charter’s CEO Tom Rutledge said the merged company had no plans to block any Internet traffic or prioritize and throttle it, regardless of whether the FCC’s new Internet rules guarding net neutrality are passed or not.