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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


Over the last two years here at Charter, we have invested hundreds of millions of dollars in taking our plant all digital, which allowed us to offer Charter Spectrum, our new product suite of video data and voice services, that includes over 200 HD channels in addition to the minimum offered, internet speeds of 60 megabits and a fully featured voice service, all delivered at highly competitive prices. We will roll that product suite out across the new footprint and drive more value for consumers in our markets.

Consumers will also benefit from the product development and innovations I mentioned a moment ago. The video industry is becoming increasingly competitive and that is driving us to invest in our products, and that means good things for consumers. For our employees and vendors, today’s announcement means greater opportunities as we grow our business, develop new products, and compete in new lines of business, each of which will provide tremendous opportunities.

And as we look at integrating our three companies, our goal is to blend our cultures and organizations with minimal disruption. I believe that these three companies share a common set of values, which at its core is about delivering value to our customers. And that will serve as the foundation upon which we can integrate our three companies.

With that, I’ll turn the floor over to Rob Marcus, the CEO and Chairman of Time Warner Cable.



Rob Marcus - Time Warner Cable - President & CEO

Thanks Tom and good morning, everyone. I’m delighted to be here today to share in the announcement of the merger of Time Warner Cable with Charter and Bright House. I’d like to thank Tom Rutledge and Steve Miron and their teams for being great partners, as we worked together to reach the agreements we’re announcing this morning.

This is a unique opportunity to create the nation’s leading pure play cable operator, leveraging the complementary strengths of the three companies, as well as our common philosophy of strong operations, excellent products, robust network investment and putting customers first. And it is a terrific deal for our shareholders, our customers and our employees.

We bring to this deal a very healthy company with strong operating momentum. Over the last 16 months, we’ve been quietly executing on the operating plan we shared with you back in January of 2014. Our steadily improving operating results over the last five quarters are a reflection of those efforts, and the Q1 results we announced last month are the clearest sign yet that we are as operationally strong as we’ve been in many years. I couldn’t be prouder of our team, all 55,000 of them.

The transaction that we announced this morning recognizes the strength and unique value of our Company. It values Time Warner Cable at roughly $79 billion, which equates to roughly 9.3 times 2015 adjusted OIBDA. Time Warner Cable shareholders will own between 40% and 44% of the combined company, and therefore will continue to participate very meaningfully in the upside of what I think is the most compelling opportunity in cable.

On many occasions over the last year and a half, we’ve stated that our guiding principle is to maximize shareholder value. With today’s announcement, we have delivered on that commitment. We will work tirelessly to get this transaction closed as expeditiously as possible and we’re committed to delivering to the New Charter, a Time Warner Cable that’s in the best shape ever. With that, I’ll turn it over to Chris Winfrey.



Chris Winfrey - Charter Communications, Inc. - CFO

Thanks, Rob, turning to slide 13 of the presentation to focus on the details of the transaction. Charter’s offering Time Warner shareholders $100 in cash and roughly $96 of Charter shares for TWC share. The stock component was priced off of last Wednesday’s closing price.

The total equity value on pay is about $57 billion, and with TWC’s $23 billion of debt, so total of $79 billion of enterprise value. Our offer equates to 8.3 times 2015 estimated adjusted EBITDA, and that multiple when I’m expressing it, will include $800 million of run rate OpEx synergies, $1.6 billion of tax assets at TWC today, and over $400 million of tax benefits to New Charter.

We’re also offering TWC shareholders a cash stock election option. TWC shareholders can offer $115 of cash and $81 in Charter shares, instead of $100 in cash and $96 in Charter stock. Throughout this discussion I’m assuming the closing of Bright House at the same time as TWC, and that TWC shareholders, excluding Liberty, elect the higher stock mix. So TWC shareholders, excluding Liberty, will own 44% of the New Charter and participate in the significant upside potential of the new company.






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