(Bloomberg) — Liberty Broadband Corp., one of cable billionaire John Malone’s holdings, soared the most ever after the company revealed it’s in merger talks with Charter Communications Inc., another key holding of the media investor.
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The Class A shares of Liberty Broadband rose as much as 25% to $76.35 Tuesday morning after the company said late Monday it had made a counteroffer to an initial pitch by Charter, which is one of the largest cable-TV companies in the US. Charter shares were down about 1%.
A merger would consolidate two public companies in which Malone holds significant interests. He holds a 49% voting stake in Liberty Broadband. Liberty in turn has a 26% interest in Charter on a fully diluted basis, according to Charter officials, and also operates an Alaskan telecom company.
Some of Malone’s investments have registered steep declines as the pay-TV industry has lost customers to streaming and other forms of video entertainment, like YouTube. The 83-year-old billionaire has been looking to simplify his empire by eliminating the multiple classes of stock that had been a hallmark of his investment style.
Prior to Monday’s announcement, Liberty Broadband was down almost 70% from its high in 2021. Other holdings including Warner Bros. Discovery Inc. and Qurate Retail Inc. are also down sharply.
In a statement after markets closed Monday, Liberty said it was responding to an initial merger proposal from a special committee of Charter directors.
Under Liberty’s proposal, investors in its common stock would receive 0.29 share of Charter Class A stock in a tax-free exchange for each they now own. That values their shares at more than $96 each based on Charter’s Monday closing price of $331.62.
Charter initially offered 0.228 of a share for each of Liberty Broadband, according to a filing.
“Liberty’s proposed transaction would rationalize the dual-corporate structure between Charter and Liberty Broadband, providing enhanced trading liquidity and removing Liberty Broadband’s existing governance rights,” Liberty Broadband Chief Executive Officer Greg Maffei said in the statement.
According to the Liberty proposal, Charter would also assume or refinance Liberty Broadband’s deb and preferred stock. Approval of the deal would require the consent of Liberty Broadband investors not affiliated with Malone.
The proposed deal includes a closing date of June 30, 2027, or earlier if the parties mutually agree, Liberty said.
Malone recently restructured another of his investments, Sirius XM Holdings Inc. Under that deal, Sirius became an independent public company separate from Liberty Media.
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