Liberty Media Corp. (LMCA: Quote, LMCB) Tuesday said it has entered into a definitive agreement with investment funds managed by, or affiliated with, Apollo Management, Oaktree Capital Management and Crestview Partners to acquire about 26.9 million shares and around 1.1 million warrants in Charter Communications, Inc. (CHTR: Quote) for $2.617 billion.
This represents an approximate 27.3 percent beneficial ownership in the cable provider for a price of $95.50 per share. Liberty expects to fund the purchase with a combination of cash on hand and new loan arrangements.
John Malone, Liberty Chairman, said, ''We are pleased with Charter's market position and growth opportunities and believe that the company's investments in its high-capacity digital network which provides digital HD and on demand television, high-speed data and voice, will benefit its customers and shareholders alike."
The transaction is expected to close in the first half of the second quarter of 2013. Upon closing, funds managed by Crestview and Oaktree will hold around 7.4 percent and 2.2 percent, respectively, of Charter's common shares.
Charter's board of directors appointed a special committee of independent and disinterested directors to consider the transaction on behalf of the company.
Charter entered into a stockholders agreement that provides Liberty Media the right to designate up to four directors for appointment to its board upon the closing of the transaction.
Liberty Media expects to designate John Malone, chairman; Gregory Maffei, president and CEO, Nair Balan, EVP and CTO; and Michael Huseby, CFO of Barnes & Noble.
Charter's board of directors will appoint these directors subject to its normal review of director qualifications, after Stan Parker, Darren Glatt, Bruce Karsh and Edgar Lee resign in connection with the closing of the transaction. Jeffrey Marcus, a partner at Crestview, will remain on the board.
The stockholders agreement also provides that Liberty Media can designate up to four directors as nominees for election to Charter's board of directors at least through Charter's 2015 annual meeting of stockholders, subject to its continued ownership level in Charter.
Up to one of these individuals may serve on each of the Audit Committee, the Nominating and Corporate Governance Committee, and Compensation and Benefits Committee of Charter's board of directors.
Additionally, Liberty Media agreed to not increase its beneficial ownership in Charter above 35 percent until January 2016 and 39.99 percent thereafter.
Liberty also agreed not to engage in proxy solicitations for nominations to Charter's board of directors through the 2015 shareholder meeting and continue to refrain so as long as its designees are nominated to the Charter board or the agreement is earlier terminated.
CHTR closed at $98.04 on Monday. LMCA settled at $110.66.
by RTT Staff Writer
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