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CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 425 on 05/26/2015
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MAY 26, 2015 / 12:00PM GMT, CHTR - Charter Announces Transactions with Time Warner Cable and Bright House Networks M&A Call



Tom Rutledge - Charter Communications, Inc. - President, CEO

Thank you Stefan. This morning we announced that we’ve signed a definitive agreement for Charter to merge with Time Warner Cable in a deal valued at nearly $80 billion. In addition, Charter agreed to acquire Bright House Networks from Advance/Newhouse for $10.4 billion.

After a long period of uncertainty, today’s announcements mark great outcome for shareholders, consumers, our collectively employees and the cable industry more broadly. Our new company will drive significant investments into American’s broadband infrastructure, delivering faster broadband speeds, better video products and more competition and innovation into the marketplace.

For shareholders, our transaction will create a new entity with greater scale, and enhanced footprint, new revenue and product innovation opportunities, and significant cost savings and tax benefits. All of which will lead to faster customer growth and product penetration, greater financial growth, and significant long-term value.

Time Warner Cable shareholders will receive $100 in cash and approximately $96 worth of Charter stock. And as Chris will discuss, we’ve agreed to a cash stock election option offering shareholders the right to receive more cash if they prefer. Charter’s offer equates to approximately 8.3 times 2015 estimated Time Warner Cable EBITDA, when adjusted for synergies and significant tax benefits created by the transaction. And at close, Time Warner Cable shareholders, excluding Liberty, will own approximately 44% of new Charter.

Today’s Bright House announcement confirm the transaction that we originally announced on March 31, on the same economic terms. The $10.4 billion we’re paying for Bright House, equates to about 7.6 times 2014 Bright House pro forma EBITDA, and attractive to fair price. When factoring in synergies and tax benefits that multiple now falls below 6.5 times, driving significant value for all shareholders.

At close, new Charter will be levered at about 4.5 times, at the higher end of our target range but both prudent and reasonable. And offering investors the substantial benefits of levered equity returns on a growth asset at scale with large tax assets.

The transaction is also supported by two of the most astute investors in the cable business. Advance/Newhouse is essentially investing $8 billion through the contribution of their high quality assets. And Liberty will be increasing their existing investment in Charter by $5 billion. Their participation in these transactions is a significant endorsement that this combination is the best path forward for these three great companies.

Through these transactions we’ll create tremendous value for all our shareholders, well beyond the closing. We will do that by accelerating the growth of the assets inside our new company. In Time Warner Cable, we get a large platform with significant top technology assets and improving operating momentum, including its stabilizing video business, growing, selling of triple play packages and improving customer metrics.

We will deploy a proven operating strategy across our combined footprint and at its core, that strategy is about investing in and offering highly competitive products at competitive prices, to drive superior value and grow customer relationships. Providing superior product and service means investing in our people and in our network. We’ll continue to take our networks all digital, removing analog signals in Time Warner Cable and Bright House Networks to free additional capacity to offer much faster Internet, more high definition content and other advanced products, including alternative forms of video delivery running on more advanced devices in customer homes.

Our combination also creates a footprint that is more efficient than any one of the stand alone footprints that our three companies have today. As slide 7 shows, that enhanced footprint offers us greater regional scale with more efficient local service capabilities, which benefits both our residential and commercial businesses. The footprint will also enhance our sales, marketing and branding capabilities versus our national competitors in places like Los Angeles, Dallas and large portions of the midwest.

The new footprint offers us greater ability to develop products and to serve medium and large multi-site commercial customers. The transaction provides us greater incentives to expand our facilities base footprint of optical networks to serve the medium and large business services marketplace, but this is also about innovation. The DNA of these three companies is made up of great innovators of the businesses. Amazing products from VOD to voice over IP, from remote storage DVRs to cable television applications, the inventors and implementers of that revolutionary technology are all here, and we intend to foster that innovative entrepreneurial spirit at New Charter.

We operate in a highly competitive industry and our ability to offer best in class products is enhanced through the economies of scale resulting from these transactions. With our 48 million homes passed, 2,400 customers and a large presence in 9 of the top 25 DMAs, we’ll have the ability to invest more heavily in the development. As one company, we’ll have the means to create better products and get them to market much faster, allowing us to deploy cutting edge products and services.

And of course, this transaction will drive cost savings in our business through the broader deployment of Charter’s operating strategy, which is designed to drive cost efficiencies by reducing churn, by deploying highly valued products and through better quality customer service practices, which reduce physical transactions on our business. And finally, by combining purchasing overhead, product development, engineering and other functions. For consumers this transaction will mean better products at better prices.






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