Comcast said it aims to ease regulatory passage for the $67 billion purchase of Time Warner Cable (TWC) by divesting cable systems with 3.9 million subscribers.
"This transaction today gives federal, state and local regulatory bodies early identification of our divestiture process which we believe should be helpful in our efforts to gain approval for our merger with Time Warner Cable," Comcast CEO Brian Roberts told investors during a call.
Comcast CFO Michael Angelakis described the transaction as an "important progress in a critical step" in completing the merger with Time Warner Cable.
The tax-free transaction with Charter is conditioned upon closing of the Time Warner Cable deal.
In the first phase, Charter will purchase 1.4 million Time Warner Cable subscribers for cash equaling 7.125 times Ebitda, which the companies estimate will come to $7.3 billion. The cable operators will swap 1.6 million subscribers in the second phase.
In the deal's last part, Comcast will spin off a unit with 2.5 million subscribers, which will be worth about $14.3 billion. The valuation of the new company includes $5.8 billion in equity and $8.5 billion in debt.
Charter will issue stock to purchase a 33% stake in the business, Comcast shareholders will own the remainder.
The lead financial advisers to Charter were Goldman Sachs (GS) bankers Timothy Ingrassia, Peter Gross and Michael Smith, and a team from LionTree Advisors including Aryeh Bourkoff, Ehren Stenzler, Rohit Dube, Matt Feldman, Adam Judd and Michael Diaz.