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Charter has agreed a $34.5bn deal to buy Cox that would combine two of the largest cable companies in the US, giving them a major footprint stretching from the New York area to southern cities such as Atlanta.
The transaction, one of the largest in the industry, comes at a time when cable television operators are under mounting pressure as viewers are increasingly cutting the cord and opting for streaming services instead.
The deal values Cox’s equity at $21.9bn and gives the business an enterprise value, including debt, of $34.5bn, according to a statement on Friday.
The companies said the deal would bring jobs back to America, a tacit move aimed at winning the support of US President Donald Trump as the transaction is likely to face antitrust challenges.
“We’ll onshore jobs from overseas to create new, good-paying careers for US employees,” the statement said.
Cox, a 127-year-old, family-run media dynasty based in Atlanta, will see its name survive through the merger. Charter and Cox plan to rename the combined company Cox Communications within a year of the merger’s planned completion.
Friday’s deal only includes the Cox family’s communications assets, meaning they will retain media properties like Axios and the Atlanta Journal Constitution newspaper, the company said.
As part of the deal, Cox shareholders will receive $11.9bn in equity, $6bn in the form of a convertible note and $4bn in cash. Cox shareholders will own about 23 per cent of the combined company after the transaction closes.
Charter shares fell 2 per cent pre market in New York.
The planned combination is the latest move by Charter shareholder John Malone, the billionaire cable investor, to consolidate the industry, which is struggling due to rising competition from streaming services and high debt piles needed to finance infrastructure investments.
Malone, known as the “cable cowboy”, recently announced a plan to combine Charter with Liberty Broadband, which is the largest investor in broadband operator Spectrum. The Cox acquisition is set to close in conjunction with Charter’s deal to buy Liberty, with Liberty agreeing to vote in favour of the combination.
Charter offers cables and broadband services to 57mn homes across 41 US states, and owns a network infrastructure that reaches more than 30 states and 12mn homes and businesses.
The company said the deal would create annual savings of $500mn annually within three years, which will help manage the $12bn debt pile it plans to inherit from Cox.
Citigroup and LionTree advised Charter on the financial terms of the deal, while Wachtell acted as legal counsel. Cox was advised by Allen & Co together with BDT & MSD, Evercore and Wells Fargo, and received legal advice from Latham & Watkins.
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