Liberty Media agreed on Tuesday to buy a 27.3 percent stake in the cable services provider Charter Communications for $2.6 billion, in the latest deal by the billionaire John C. Malone.
Under the terms of the agreement, Liberty will pay what amounts to $95.50 a share for the stake, which is comprised of 26.9 million shares and 1.1 million warrants. That represents a 6 percent premium to Charter’s closing price on Friday, the last day before reports of the pending investment began to emerge.
The transaction will give Liberty a significant stake in one of the country’s major cable television operators, something that Mr. Malone hasn’t owned in over a decade. Charter reported about 4 million video customers and 3.8 million residential Internet customers as of Dec. 31.
For the Charter investors selling â€" Apollo Global Management, Oaktree Capital Management and Crestview Partners â€" the Liberty investment will allow them to pare back the holdings they gained upon taking control of the cable operator in 2009. The investment firms became the principle owners of Charter as part of a deal to let the company emerge from bankruptcy protection.
As part of the deal, Liberty will name four directors to Charter’s board, including Mr. Malone and his top lieutenant, Gregory Maffei. Liberty also agreed to cap its potential ownership stake in Charter to 35 percent until January of 2016, and 39.99 percent afterward.
The deal, which will be financed with cash on hand and new loans, is expected to close in April or May.
