In Could, U.S. cable giants Constitution Communications and Cox Communications entered right into a definitive settlement to mix their companies in a “transformative transaction” that may create an trade chief within the U.S. cable sector.
The proposed deal assigns Cox Communications an enterprise worth of roughly $34.5 billion.
Constitution Communications Historical past
Constitution Communications was shaped in January 1993 by three former executives of St. Louis-based Cencom Cable Associates, and has since grown into a significant mounted broadband companies supplier and Fortune 500 firm.
In February 1994, Constitution unveiled its first acquisition, which noticed it spend almost $200 million to acquire ten cable techniques in Louisiana, Georgia, and Alabama. The techniques had been acquired from the McDonald Group of Birmingham, Alabama, and served about 100,000 subscriptions within the Southeast.
Over the subsequent 5 years, the corporate acquired round 15 regional cable networks, boosting its footprint significantly, and in November 1999, Constitution went public after making greater than ten main acquisitions in a single yr.
Lower than a decade later, the honeymoon interval was over; the corporate was battling the burden of its $21.7 billion debt mountain, prompting Constitution to file for Chapter 11 chapter safety in March 2009. The chapter plan was authorised in November 2009, extinguishing roughly $8 billion value of debt and permitting Constitution to relist on the NASDAQ inventory alternate in September 2010.
Liberty Acquires Possession Curiosity in Constitution
Large adjustments had been on the way in which. In March 2013, Liberty Media—an organization managed by former Tele-Communications, Inc. (TCI) CEO John C. Malone, extensively recognized within the trade because the “Cable Cowboy”—agreed to accumulate a 27.3% possession curiosity in Constitution.
The stake, which allowed Liberty to turn into the corporate’s largest single shareholder, was assembled largely by the acquisition of shares held by funding funds akin to Apollo Administration, Oaktree Capital Administration, and Crestview Companions, who inherited their respective stakes by way of Constitution’s 2009 post-bankruptcy restructuring.
The present iteration of Constitution was created in 2015, when the corporate, at the moment nonetheless a mid-ranking participant, agreed to stage an audacious twin takeover of cable operators Time Warner Cable (TWC) and Shiny Home Networks. The offers had been valued at $78.7 billion and $10.4 billion, respectively.
The newly enlarged firm went on to grab second place within the mounted broadband market.
Cox Communications Historical past
The Cox household, house owners of Cox Communications, declare to be the “longest steady operator within the trade,” with the household having acquired its first cable tv franchise in 1962. The corporate’s historical past stretches again additional: Cox Communications is definitely the biggest division of Cox Enterprises, a family-owned enterprise based again in 1898 by Governor James M. Cox.
At the moment, its HFC cable networks are understood to go 12 million properties in 670 service areas throughout 19 states, and the corporate—which is privately owned and below no obligation to make its operational knowledge—is believed to preside over a subscription base of greater than 6 million.
The Altice USA Various
Cox wasn’t essentially Constitution’s first alternative for an acquisition, nonetheless. In February 2024, Bloomberg reported that Constitution was mulling a takeover of Altice USA, which is saddled with a debt pile of round $25 billion, and has been evaluating an asset sale since 2022.
Altice USA was shaped in June 2016, following the completion of Altice Group’s $17.7 billion acquisition of Cablevision Programs (buying and selling as Optimum). Altice had beforehand acquired Suddenlink for $9.1 billion in December 2015.
With Constitution baulking at Altice’s monumental debt pile, the hunt was on for one more goal, and 84-year-old billionaire Malone turned his consideration to the privately held cableco that had topped his dream checklist of acquisitions for the last decade since he acquired Time Warner Cable and Shiny Home Networks: Cox Communications.
Malone’s contemporary plan was reportedly developed in November 2024, following Donald Trump’s re-election as U.S. president. With Trump again within the White Home, Constitution believed it will have a better time getting a mega-merger authorised by authorities regulators.
Against this, senior executives reckoned {that a} transaction of this scale was far much less prone to be authorised by Joe Biden’s antitrust officers.
Bloomberg has described the makes an attempt by Constitution CEO Chris Winfrey to woo his reverse quantity—Cox Enterprises Chairman and Chief Govt Officer Alex Taylor, the nice grandson of the corporate’s founder —as a “whirlwind courtship,” with the deal painstakingly pieced collectively in a flurry of behind-the-scenes exercise between February and Could 2025.
The Cox Constitution Transaction
As per the transaction, Cox Communications has an enterprise worth of roughly $34.5 billion.
Beneath the phrases of the settlement, Cox Enterprises will obtain: $4 billion in money; a $6 billion notional quantity of convertible most popular models; and roughly 33.6 million frequent models with an implied worth of $11.9 billion, that are exchangeable for Constitution frequent shares. Moreover, the mixed entity will assume Cox’s roughly $12 billion in excellent debt.
At closing, Cox Enterprises will personal roughly 23% of the mixed entity’s absolutely diluted shares excellent, on an as-converted, as-exchanged foundation. Advance/Newhouse, which acquired a roughly 13% stake in Constitution in 2016, following the latter’s takeover of its Shiny Home Networks subsidiary, will retain a minor stake within the enlarged entity and two board members.
The Way forward for Cox Communications
The transaction is topic to customary closing situations, together with the receipt of regulatory and Constitution shareholder approvals. All issues being effectively, inside a yr of the transaction closing, the mixed firm will change its identify to Cox Communications, whereas Constitution’s Spectrum model will turn into the consumer-facing model throughout the communities Cox serves.
The enterprise will stay headquartered in Stamford, Connecticut, however will retain a big presence on Cox’s Atlanta, Georgia campus.
Constitution’s double-deal for Time Warner Cable and Shiny Home Networks again in 2015, elevated the cableco to the highest desk, even when it didn’t dislodge long-term broadband market chief Comcast.
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