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SEC Filings

PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
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Table of Contents

This analysis indicated the following minimum, mean, and maximum LTM and NTM Adjusted EBITDA multiples (both before and after giving effect to the present value of tax attributes of the target company) for the selected transactions, and compared to the multiples implied by the mergers:

 

     LTM Multiple      NTM Multiple  
     Enterprise
Value
     Adjusted
Enterprise
Value
     Enterprise
Value
     Adjusted
Enterprise
Value
 

Selected Transactions

           

Minimum

     7.1x         6.3x         7.0x         5.4x   

Mean

     8.5x         7.6x         7.8x         7.0x   

Maximum

     9.9x         9.6x         9.1x         8.8x   

Mergers

     9.3x         9.1x         9.2x         9.0x   

Pro Forma Financial Analyses

DCF Analyses. LionTree performed a discounted cash flow analysis of Pro Forma Charter by calculating the estimated net present value of the unlevered, after-tax free cash flows that Pro Forma Charter was forecasted to generate through 2019 (both with and without the BHN transactions), based on the forecasts. LionTree calculated terminal values for Pro Forma Charter by applying a range of terminal value multiples of 6.5x to 7.5x to Pro Forma Charter’s 2019 estimated LTM Adjusted EBITDA. The present values of the cash flows and terminal values, including the net present value of the pro forma tax attributes of the combined company and the transaction effects, were then calculated using discount rates ranging from 6.0% to 7.5% (except for the tax attributes, which were calculated using a 10.0% discount rate). The same analysis was also performed on the forecasted unlevered, after-tax free cash flows and terminal values for standalone Charter. The discounted cash flow analysis indicated the following implied per share equity value reference ranges for Pro Forma Charter (with Option A or Option B, and with or without Bright House), as compared to the implied per share reference ranges for Charter on a standalone basis based on the same discount rates and multiples:

 

Implied Per Share Equity Reference Range for

Stand-Alone Charter

$169.84—$217.39

Implied Per Share

Equity Reference Range for

Pro Forma Charter (assuming Option A)

  

Implied Per Share

Equity Reference Range for

Pro Forma Charter (assuming Option B)

$166.27—$230.15

   $165.26—$234.62

Implied Per Share

Equity Reference Range for

Pro Forma Charter (assuming Option A),

including Bright House

  

Implied Per Share

Equity Reference Range for

Pro Forma Charter (assuming Option B),

including Bright House

$176.22—$239.68

   $176.22—$244.45

Pro Forma DCF Accretion/Dilution Analysis. LionTree performed discounted cash flow accretion/dilution analyses of Pro Forma Charter by comparing the implied per share equity reference range of Charter on a standalone basis, as discussed above, to the implied per share equity reference range derived from the pro forma discounted cash flow analysis of Pro Forma Charter (with Option A or Option B, and with or without Bright House). The analysis indicated that the transaction could be (i) between approximately (2.1)% and 5.8% accretive to holders of Charter common stock in the case of Option A without Bright House, (ii) between approximately (2.7)% and 7.9% accretive to holders of Charter common stock in the case of Option B without Bright House, (iii) between approximately 3.7% and 10.2% accretive to holders of Charter common stock in the case of Option A with Bright House, and (iv) between approximately 3.7% and 12.4% accretive to holders of Charter common stock in the case of Option B with Bright House.

 

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