Media, communications, and entertainment company Liberty Media (NASDAQ: LMCA ) has signed agreements with several investment funds allowing it to acquire a 27.3% stake in Charter Communications (NASDAQ: CHTR ) , the fourth-largest cable company in the U.S., both companies announced today.
Liberty says the $2.617 billion cost of the deal for 26.9 million Charter shares and 1.1 million warrants will be paid for with "cash on hand and new loan arrangements."
The investment funds selling the shares and warrants are managed by or affiliated with Apollo Management, Oaktree Capital Management, and Crestview Partners. Those funds are currently the top three institutional holders of Charter's shares. At the deal's completion, Crestivew will hold 7.4% of Charter and Oaktree 2.2%.
According to the agreement, Liberty Media will not be allowed to increase ownership in Charter above 35% until January 2016 and cannot go above a 39.99% share thereafter.
The transaction is expected to close in the middle of the second quarter of 2013 subject to conditions including the waiting period mandated by the Hart-Scott-Rodino Antitrust Improvements Act.