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(Bloomberg) — Charter Communications Inc. (CHTR) is in advanced talks to combine with privately held Cox Communications in a deal that would unite two of the biggest US cable providers, people familiar with the matter said.
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The companies are discussing a cash and stock transaction that would value Cox at more than $30 billion including debt, according to the people. The Cox family would be the largest shareholder in the combined company with a stake of about 20% and would hold seats on its board, they said.
A deal could be announced within days, the people said, asking not to be identified because the information is confidential. Terms are still being ironed out and talks could be delayed or falter, they said.
Charter shares closed at $419.57 in New York on Thursday, giving the company a market value of roughly $66 billion.
Representatives for Stamford, Connecticut-based Charter and Atlanta-based Cox couldn’t be immediately reached outside of regular business hours.
(CHTR)
A deal would rank as one of the largest of the year and come at a time when cable companies are facing increasing competition from wireless providers such as AT&T Inc (T). and T-Mobile US Inc (TMUS)., which are luring away their broadband customers with their own internet offerings. At the same time, streaming companies such as Netflix Inc. (NFLX) have upended the traditional business of pay-TV.
In November, Liberty Media (FWONK) Chairman John Malone helped fuel M&A expectations involving Charter when he said the company should be allowed to merge with a media or telecom rival to stay competitive. Speaking at Liberty Media’s investor day in New York, he named Cox among a number of possible merger candidates. Charter and Cox previously discussed a potential deal more than a decade ago.
Turf Wars
Cable and phone companies have been engaged in an intense turf war, seeking to win over customers in areas that others have dominated. Cable providers have been selling their own mobile phone plans by leasing network access from major carriers. At the same time, phone carriers have been poaching home internet subscribers from cable companies.
The bet is that customers will in the future prefer to buy their internet and mobile phone services from the same provider — a trend referred to as convergence. A combination of Charter and Cox would position them to better compete in that environment by allowing them to bundle offerings and more efficiently invest in infrastructure.