Charter and Cox Announce Merger

Charter Communications and Cox Communications have announced a definitive agreement to combine their companies in a move intended to create an industry leader in mobile and broadband communications services, seamless video entertainment, and customer service. The proposed transaction values Cox Communications at an enterprise value of approximately $34.5 billion based on, and at parity with, Charter’s recent enterprise value to 2025 estimated Adjusted EBITDA trading multiple.

“We’re honored that the Cox family has entrusted us with its impressive legacy and are excited by the opportunity to benefit from the terrific operating history and community leadership of Cox,” said Chris Winfrey, President and CEO of Charter. “Cox and Charter have been innovators in connectivity and entertainment services – with decades of work and hundreds of billions of dollars invested to build, upgrade, and expand our complementary regional networks to provide high-quality internet, video, voice and mobile services. This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses. We will continue to deliver high-value products that save American families money, and we’ll onshore jobs from overseas to create new, good-paying careers for U.S. employees that come with great benefits, career training and advancement, and retirement and ownership opportunities.”

In the transaction, Charter will acquire Cox Communications’ commercial fiber and managed IT and cloud businesses, and Cox Enterprises will contribute Cox Communications’ residential cable business to Charter Holdings, an existing subsidiary partnership of Charter.

As consideration in the transaction, Cox Enterprises will receive $4 billion in cash,
$6 billion notional amount of convertible preferred units in Charter’s existing partnership, which pay a 6.875% coupon, and which are convertible into Charter partnership units, which are then exchangeable for Charter common shares, and approximately 33.6 million common units in Charter’s existing partnership, with an implied value of $11.9 billion2, and which are exchangeable for Charter common shares. Cox Enterprises will own approximately 23% of the combined entity’s fully diluted shares outstanding. The combined entity will assume Cox’s approximately $12 billion in outstanding debt.

The transaction is subject to customary closing conditions, including the receipt of regulatory and Charter shareholder approvals. Within a year after the closing, the combined company will change its name to Cox Communications. Spectrum will become the consumer-facing brand within the communities Cox serves. The combined company will remain headquartered in Stamford, CT, and will maintain a significant presence on Cox’s Atlanta, GA campus following the closing.

Channel Impact^®
Benefits from the merger are expected to include increased competitive capability in the areas of broadband, wireline, wireless, mobile, video distribution, and satellite broadband.