Charter Strikes $55B Deal for Time Warner

Charter Communications will spend $55.33 billion to acquire Time Warner Cable in a cash-and-stock deal that would instantly create one of the largest pay-television and broadband operators in the US. As part of the agreement, Charter will also buy Bright House Networks for more than $10 billion. Charter will provide $100 in cash and shares of a new public parent company equal to 0.5409 shares of Charter for each outstanding Time Warner Cable Inc. share. The transaction values each Time Warner share at about $195.71. Including debt, the companies today valued the deal at a total of $78.7 billion. Shares of Charter are up more than 3% in premarket trading.

Charter had wanted to buy Time Warner Cable Inc. earlier, but Time Warner Cable chose a $45 billion offer from Comcast Corp. instead. Comcast walked away from the Time Warner deal after regulators pushed back against it. Regulators had concerns that the two companies together would undermine online video competition. Regulators are likely to put this deal under a microscope as well, but "as a smaller transaction it may face less opposition," the New York Times reports. Shares of Time Warner Cable closed Friday at $171.18. They've climbed 13% so far in 2015, compared with a 3% gain in the Standard & Poor's 500 index. (More Time Warner Cable stories.)