(Bloomberg) — Liberty Broadband Corp., one of the holdings of cable billionaire John Malone, rose the fastest after the company said it is in merger talks with Charter Communications Inc., another major holding of the media investor.
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Liberty Broadband’s Class A shares jumped as much as 25% to $76.35 on Tuesday morning after the company announced Monday night that it had made a counteroffer to an initial pitch from Charter, one of the largest cable television companies in the U.S. Charter shares fell about 1%.
A merger would consolidate two publicly traded companies in which Malone has significant interests. He has a 49% voting interest in Liberty Broadband. Liberty, in turn, has a 26% stake in Charter on a fully diluted basis, according to Charter officials, and also operates a telecommunications business in Alaska.
Some of Malone’s investments have fallen sharply as the pay-TV industry has lost customers to streaming and other forms of video entertainment, such as YouTube. The 83-year-old billionaire has sought to simplify his empire by eliminating the multiple share classes that were a hallmark of his investing style.
Before Monday’s announcement, Liberty Broadband had fallen nearly 70% from its 2021 high. Other holdings, including Warner Bros. Discovery Inc. and Qurate Retail Inc., have also fallen sharply.
Liberty responded in a statement after markets closed on Monday to an initial merger proposal from a special committee of Charter directors.
Under Liberty’s proposal, investors in the common stock would receive 0.29 share of Charter Class A stock in a tax-free exchange for each share they currently own. That values their shares at more than $96 each, based on Charter’s closing price of $331.62 on Monday.
According to a document, Charter initially offered 0.228 shares for each Liberty Broadband share.
“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,” said Greg Maffei, CEO of Liberty Broadband, in the statement.
Under the Liberty proposal, Charter would also acquire or refinance Liberty Broadband’s debt and preferred stock. Approval of the deal would require the consent of Liberty Broadband investors unrelated to Malone.
The proposed deal includes a closing date of June 30, 2027, or earlier if the parties 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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