Charter Communications agreed to acquire privately held Cox Communications in a deal that values Cox at about $34.5 billion including debt and creates one of the largest cable and broadband providers in the nation.
Charter, the parent of Spectrum, is paying $21.9 billion in equity. It will also absorb $12.6 billion of Cox debt and other obligations, the company said in a statement Friday.
Cox's 6 million customers will be part of the Spectrum brand. An industry pioneer, Cox is the country's third-largest cable company. After the deal closes, the combined company will be known as Cox Communications.
Charter executives said the combination will offer better leverage to compete in an industry crowded with competition from national landline and wireless providers, regional mobile services, satellite TV and global video distribution companies.
Charter expects about $500 million of annualized cost synergies within three years of the close.
Cox CEO Chris Winfrey will remain at his post, while Alex Taylor, chairman and CEO of Cox Enterprises (the parent of Cox Communications), will join Charter's board as chairman. Current Charter Chairman Eric Zinterhofer will become an independent director on the board. Cox will have the right to nominate two more members to the 13-seat board.
Analysts Cheer Cox Communications Deal
After the news, Oppenheimer upgraded Charter to outperform from market perform with a 500 price target. An Oppenheimer analyst called the deal a "major positive," according to a summary from TheFly.com. The analyst expects substantial buybacks plus lower capital expenditures that should drive free cash flow in 2027.
Pivotal Research raised its price target on Charter to 600 from 540 and kept a buy rating. It believes Charter paid a "very attractive valuation," and the acquisition is likely to accelerate its growth. Pivotal analysts don't expect regulatory issues, per TheFly.com.
Charter Stock Climbs After Announcement
Charter stock rose more than 4%, to the highest point since October 2023, in early trade. But the gain faded to less than 1% around 11:30 a.m. ET. Shares Thursday topped the 415.27 buy point of a 26-week irregular pattern, but had already cleared resistance around 390. Charter has an IBD Composite Rating of 92. It is up about 24% year to date, according to IBD MarketSurge.
"This combination will augment our ability to innovate and provide high-quality, competitively priced products, delivered with outstanding customer service, to millions of homes and businesses," said Chris Winfrey, President and CEO of Charter.
Liberty Broadband, which Charter agreed to acquire in November, said Friday it will accelerate the closing of that deal to coincide with the Cox Communications transaction.
Liberty — which holds 45.6 million shares of Charter and its Alaska subsidiary — will no longer be a direct shareholder in Charter. Its three members on Charter's board will step down.
