Liberty Media’s John Malone is about to become the king of cable — in Alaska. His Liberty Interactive said this morning that it has agreed to buy the state’s biggest data, wireless, video, and voice provider, General Communications, in a deal that values the company at $2.7 billion.
The news sent GCI shares up 59% in initial trading this morning. The companies expect the deal to close early in 2018 after it’s reviewed by Justice Department antitrust officials and the FCC.
The Alaska company “generates solid cash flow with upside potential and is a strong fit with the largest businesses in Liberty Ventures,” Liberty Interactive CEO Greg Maffei says. GCI ended 2016 with about 108,000 residential video subscribers, 195,000 wireless customers, and 128,000 internet subscribers.
Like most Malone deals, this one is complicated — in part to minimize potential tax payments. It involves a reorganization with Liberty Ventures Group creating a company, GCI Liberty, with GCI its largest operating asset. Liberty Interactive will own 84% of GCI Liberty’s voting shares.
In conjunction with the deal, Liberty Interactive plans to rename itself QVC Group, to offer an asset-based stock built around the home shopping service.
Liberty also owns 38% of HSN, formerly known as Home Shopping Network.
GCI was part of Malone’s Tele-Communications Inc. until 1986. TCI was the nation’s No. 1 cable operator until 1999 when Malone sold it to AT&T.
“The leaders of Liberty Interactive know us, respect how we operate, and believe that we will continue to grow value for customers and shareholders,” GCI chief Ron Duncan says. “Our culture, leadership, and focus on Alaska will continue as strong as ever.”
GCI investors can trade each share for $27.50 worth of common stock in the new company plus $5 of preferred shares.