Charter to acquire Liberty Broadband Corporation

Charter Communications, Inc.  (along with its subsidiaries, “Charter”) and Liberty Broadband Corporation (NASDAQ: LBRDA, LBRDK, LBRDP) announced today that they have entered into a definitive agreement under which Charter has agreed to acquire Liberty Broadband in an all-stock transaction.

Under the terms of the agreement, each holder of Liberty Broadband Series A common stock, Series B common stock, and Series C common stock (collectively, “Liberty Broadband common stock”) will receive 0.236 of a share of Charter common stock per share of Liberty Broadband common stock held, with cash to be issued in lieu of fractional shares. Each holder of Liberty Broadband Series A cumulative redeemable preferred stock (“Liberty Broadband preferred stock”) will receive one share of newly issued Charter cumulative redeemable preferred stock (“Charter preferred stock”) per share of Liberty Broadband preferred stock held, which Charter preferred stock will substantially mirror the current terms of the Liberty Broadband preferred stock.

Liberty Broadband’s principal assets currently consist of approximately 45.6 million common shares of Charter and its subsidiary GCI, LLC (“GCI”), Alaska’s largest communications provider. Liberty Broadband has agreed to spin off its GCI business by way of a distribution to the stockholders of Liberty Broadband prior to the closing of the acquisition of Liberty Broadband by Charter. The GCI distribution is expected to be taxable to Liberty Broadband and its stockholders, with Charter bearing the corporate level tax liability upon completion of the combination. However, to the extent such corporate level tax liability exceeds $420 million, Charter will be entitled under a tax receivables agreement to the portion of the tax benefits realized by GCI corresponding to such excess. The companies currently expect the transaction to close on June 30, 2027 unless otherwise agreed, subject to the completion of the GCI spin-off and other customary closing conditions.

As a result of the transaction, Charter expects to retire the approximately 45.6 million Charter shares currently owned by Liberty Broadband and to issue approximately 34.0 million shares to holders of Liberty Broadband common stock at the closing, resulting in a net decrease of approximately 11.5 million Charter shares outstanding. Liberty Broadband has existing debt of $2.6 billion (excluding debt at GCI) that will be repaid prior to closing or assumed by Charter, and $180 million of preferred equity that will become Charter preferred equity following the close of the transaction.

The transaction was unanimously recommended to the Charter Board of Directors for approval by a special committee composed of independent, disinterested directors and advised by independent financial and legal advisors. The Boards of Directors of both Charter and Liberty Broadband have approved the transaction, which is subject to customary closing conditions, including (among others):

Approval of the merger agreement and related transactions by holders of:

• A majority of the aggregate voting power of Charter’s outstanding stock eligible to vote, excluding shares owned by Liberty Broadband and certain other persons
• A majority of the aggregate voting power of Liberty Broadband’s outstanding stock eligible to vote
• A majority of the aggregate voting power of Liberty Broadband’s outstanding stock eligible to vote, excluding shares owned by John C. Malone and certain other persons and entities
• Approval of the stock issuance by holders of a majority of the votes cast by holders of Charter’s outstanding stock
• The receipt of any applicable regulatory approvals

John Malone and certain related holders have agreed to vote, subject to certain exceptions, shares beneficially owned by them, representing approximately 48% of the aggregate voting power of Liberty Broadband, in favor of
the transaction. Greg Maffei, President and Chief Executive Officer of Liberty Broadband, and certain related holders have also agreed to vote, subject to certain exceptions, shares beneficially owned by them, representing approximately 4% of the aggregate voting power of Liberty Broadband, in favor of the transaction.

In addition, in connection with the entry into the transaction, Charter, Liberty Broadband and Advance/Newhouse Partnership have agreed to amend certain existing governance arrangements of Charter to, among other things, modify the way in which Charter repurchases its shares of common stock from Liberty Broadband during the pendency of the transaction. Charter intends to make repurchases of Charter shares from Liberty Broadband in amounts of approximately $100 million per month, subject to certain adjustments, and as needed incremental repurchases or loans to Liberty Broadband, to allow for the timely repayment of Liberty Broadband debt in anticipation of the combination of the companies at closing. Liberty Broadband will remain subject to the existing voting cap of 25.01%. Proceeds from share repurchases applied to debt service are expected to be tax free.

“We are pleased to announce this agreement today with Liberty Broadband. I am grateful for Liberty Broadband’s strategic partnership since 2013, and particularly for the support of John Malone, Greg Maffei and our Liberty Broadband nominated board members,” said Chris Winfrey, President and CEO of Charter. “We look forward to their continued partnership and support in the coming years in driving value for our shareholders.”

“Today’s announced transaction will rationalize Liberty Broadband’s trading discount and ultimately provide our shareholders with enhanced liquidity,” said John Malone, Chairman of Liberty Broadband. “The transaction closing timeline reflects my belief in Charter’s operating strategy under the excellent leadership of Chris Winfrey and team and the value creation opportunity for both Charter and Liberty shareholders. I look forward to that continued upside, and to holding Charter shares after the merger closing.”

“We are pleased to have reached definitive terms with Charter and provide Liberty shareholders with certainty of a future transaction at an attractive exchange ratio. This transaction simplifies our corporate structure and allows our shareholders to participate in Charter’s upside through direct ownership of the equity. In connection with the transaction, we expect GCI will become an independent public company prior to close. Liberty has had a great partnership with Ron Duncan and GCI management since 2018 and will continue to participate in value creation opportunities for the business,” said Greg Maffei, President & CEO of Liberty Broadband. “Reaching this agreement was an important milestone in my leadership of the company, and I will be stepping down from my role as Liberty Broadband CEO at the end of this year. I look forward to continuing as a director of Charter and a meaningful shareholder.”

Centerview Partners LLC is serving as exclusive financial advisor to the special committee of Charter. Citi is serving as exclusive financial advisor to Charter. Wachtell, Lipton, Rosen & Katz is serving as legal counsel to the special committee of Charter. J.P. Morgan is serving as exclusive financial advisor to Liberty Broadband, and O’Melveny & Myers LLP is serving as legal counsel to Liberty Broadband. PRnewswire