Liberty Broadband Corp. (NASDAQ: LBRDA, LBRDK) and GCI Liberty, Inc. (NASDAQ: GLIBA, GLIBP) on Aug. 6 announced that they have entered into a definitive merger agreement under which Liberty Broadband has agreed to acquire GCI Liberty in a stock-for-stock merger.
Liberty Broadband’s businesses consist of its interest in Charter Communications, Inc. and its subsidiary Skyhook. Liberty Broadband concurrently announced that its board of directors increased its repurchase authorization by $1 billion, bringing total authorization to $1.2 billion.
GCI Liberty’s principal assets consist of its subsidiary GCI Holdings, LLC and non-controlling interests in Liberty Broadband, Charter Communications, Inc., and LendingTree, Inc.
Liberty Broadband and GCI Liberty believe the combination of companies will provide the following benefits to all shareholders: generate savings on public company and overhead costs; simplify administrative and management complexity; an aim to reduce trading discounts to underlying equities; improved flexibility for future strategic combinations.
At the closing of the proposed merger: former holders of the GCI Liberty common stock are expected to own in the aggregate shares of LBRDK and LBRDB representing approximately 30.6% of the total number of outstanding Liberty Broadband common shares; former holders of GLIBP will own in the aggregate all outstanding shares of Liberty Broadband Preferred Stock newly issued in the merger; former holders of GCI Liberty common stock and GLIBP are expected to own, in the aggregate, approximately 16.7% of the voting power of Liberty Broadband.
The foregoing percentages are based on approximately 26.5 million shares of LBRDA, approximately 2.5 million shares of LBRDB and approximately 153.0 million shares of LBRDK outstanding as of July 15, 2020 and approximately 101.3 million shares of GLIBA and approximately 4.5 million shares of GLIBB outstanding as of April 30, 2020 and approximately 7.2 million shares of GLIBP outstanding as of March 31, 2020.
The companies expect the merger to close in the first half of 2021, subject to potential COVID-19 related delays.
The combination of companies was recommended to the Liberty Broadband board of directors for approval by a special committee composed of independent, disinterested directors and advised by independent financial and legal advisors. The combination was recommended to the GCI Liberty board of directors for approval by a special committee composed of independent, disinterested directors and advised by independent financial and legal advisors.
In the transaction, John C. Malone, the chairman of the board of Liberty Broadband and GCI Liberty, and certain related holders, agreed to vote shares beneficially owned by them, representing approximately 48.3% of the aggregate voting power of Liberty Broadband and approximately 27.0% of the aggregate voting power of GCI Liberty, in favor of the combination of companies.
“This process was driven by independent special committees of Liberty Broadband and GCI Liberty, and John Malone and I fully endorse the combination,” said Greg Maffei, Liberty Broadband and GCI Liberty President and CEO. “The transaction is financially attractive and beneficial for both companies.”
In addition, Liberty Broadband entered into an exchange agreement with Mr. Malone pursuant to which he will waive the right to receive LBRDB in the combination with respect to certain shares of GLIBB beneficially owned by him and will instead receive an equal number of LBRDK so that Mr. Malone’s aggregate voting power at Liberty Broadband remains at approximately 49% at the closing of the combination, which is equal to Mr. Malone’s current voting power in Liberty Broadband.
Following the closing, Mr. Malone would be able to exchange shares of LBRDK on a one-for-one basis for the waived shares of LBRDB in order to preserve his target voting power of approximately 49% (subject to adjustment for certain transfers by Mr. Malone) following the occurrence of certain voting dilution events and in certain circumstances, Mr. Malone will be required to transfer shares of LBRDB owned by him to Liberty Broadband in exchange for an equal number of shares of LBRDK in order to preserve the target voting power.
Perella Weinberg Partners LP is serving as exclusive financial advisor to the special committee of Liberty Broadband, and Evercore is serving as exclusive financial advisor to the special committee of GCI Liberty. Debevoise & Plimpton LLP is serving as legal counsel to the special committee of Liberty Broadband, and Morris, Nichols, Arsht & Tunnell LLP is serving as legal counsel to the special committee of GCI Liberty. Steptoe & Johnson LLP is serving as independent tax counsel to the special committee of GCI Liberty, and Skadden is serving as special tax counsel to GCI Liberty. Baker Botts LLP is representing GCI Liberty in their capacity as regular outside counsel.
Learn more at http://www.libertybroadband.com/events and http://www.gciliberty.com/events.