NEW YORK (CNNfn) - Marcus Cable Co. said Thursday it has agreed to acquire St. Louis-based Charter Communications Inc. for $4.5 billion.
The purchase will create the seventh-largest cable operator in the United States, combining Charter's 1.3 million subscribers with the 1.2 million cable customers of Dallas-based Marcus, many of whom are adjacent to Charter's subscriber base.
Paul Allen, the Microsoft Corp. co-founder and billionaire investor who took control over Marcus Cable in April, said the deal represents 14 times the combined company's projected 1999 operating cash flow.
Marcus Cable founder Jeffrey Marcus will serve as chairman of the combined company. Charter Chief Executive Jerald Kent will retain his title.
Marcus Cable said the combined company, which has not been named, will be based in St. Louis while retaining a presence in Dallas.
"This investment marks another step forward in my 'Wired World' strategy, which is a connected future marked by the merger of high-bandwidth data channels, the power of the personal computer and the availability of valuable content," Allen said.
As part of the deal, Nashville-based Gaylord Entertainment Co. (GET) said it expects $370 million in proceeds from the merger in connection with Charter's purchase of Gaylord Entertainment's cable television systems in September 1995.
Gaylord Entertainment said the transaction will result in an after-tax gain of approximately $95 million, or $2.85 per share.
"Cable wired to the home has great opportunities," said Terry London, Gaylord Entertainment CEO. "The strategy has got to be a combination of programming and distribution."
Both Marcus Cable and Charter Communications are privately held companies.