GCI’s Ownership Up in the Air Amid Liberty-Charter Merger Talks
Charter's merger proposal excluded GCI from the deal.
Ari Bertenthal
WASHINGTON, Sep. 24, 2024 - Liberty Broadband yesterday announced a proposed merger with Charter Communications. As part of the offer, Charter would gain ownership of GCI, an Alaska broadband and wireless provider acquired by Liberty in 2020.
Charter’s acquisition of GCI, though, is far from certain at this point.
“In GCI, Charter would be acquiring an attractive business that is the leading connectivity platform in Alaska with significant opportunity for future value creation,” Liberty Broadband President and CEO Greg Maffei said yesterday in a statement.
GCI, headquartered in Anchorage, ended the second quarter with 158,000 broadband and 201,900 wireless subscribers.
Charter, on the other hand, lost 149,000 subscribers in the second quarter.
Liberty Broadband owns about 26% of Charter. Maffei serves on Charter’s board.
In initiating deal talks with Liberty, Charter proposed a merger that would not include GCI.
Charter CEO Christopher Winfrey said in a Sep. 15 letter to Liberty’s board that the proposed exchange ratio of 0.23 Charter shares for each Liberty share would assume that Liberty disposed of GCI prior to the transaction.
“Alternatively,” he said, “we are willing to discuss terms for a transaction that would include GCI.”
Winfrey indicated that keeping GCI out of the deal would sidestep the need for Federal Communications Commission approval, therefore streamlining the process. He said that the divestiture of GCI would allow the merger to occur without any unnecessary roadblocks.
Both parties in their communications about the sale noted their willingness to come to favorable terms for the benefit of their collective stockholders. The entities mentioned their strong business relationship several times in their correspondence.
Maffei’s letter said the Charter proposal undervalued Liberty. As a result, he proposed a transaction that would be inclusive of GCI, but would alter the share exchange ratio to 0.29 Charter shares for each Liberty share.
KeyBanc analyst Brandon Nispel said in a client note Tuesday "a transaction to acquire GCI would be accretive to Charter given potential operating synergies, and financial synergies by refinancing GCI's debt." But with Charter having 30 million broadband subscribers, he added, "acquiring GCI is fairly immaterial to Charter's financial profile."
