The shareholders of Charter Communications (CHTR, Financial) and Time Warner Cable(TWC, Financial) collectively approved the merger of the two companies on Sept. 21. The shareholder votes follow an announcement in May from Charter Communications of its intent to acquire Time Warner Cable and also Bright House Networks LLC.
Charter has agreed to pay $78.7 billion for Time Warner Cable, offering two share conversion options for Time Warner Cable shareholders upon completion of the transaction. The Bright House Networks part of the deal is valued by Charter at $10.4 billion and the transaction will take place in conjunction with the Charter and Time Warner Cable acquisition.
Upon completion of Charter’s merger, the Charter, Time Warner Cable and Bright House Networks businesses will combine to be the second-largest cable television company in the United States. Charter’s merger deal is now awaiting regulatory approval and other customary acquisition procedures. The company expects the entire transaction to close by the end of 2015.
In addition to customer growth, the acquisition of Time Warner and Bright House would significantly boost total revenue for Charter and help the company improve its earnings per share growth. In Charter’s most recent quarter it reported revenue of $2.4 billion, an increase of 7.6% from the comparable second quarter in 2014. For the second quarter, Charter reported a net loss of $122 million resulting in earnings per share of -$1.09. Currently, Charter’s main business segments include Video, Internet, Voice, Commercial and Advertising Sales. In the second quarter, Video accounted for the majority of the firm’s revenue at 47% or $1.2 billion.
The market continues to remain in support of the merger. Since the announcement on May 26, Charter’s stock has gained 4.67% while Time Warner Cable’s stock has gained 7.37%. Leading hedge fund managers also appear to remain in favor of the deal. Dodge & Cox, a leading shareholder of Time Warner Cable, continues to maintain its shareholder position in the third quarter with stock ownership of 6.84%. Meanwhile, Warren Buffett (Trades, Portfolio) continues to be a leading shareholder of Charter Communications with ownership share in the company of 7.6%.
