Charter Set to Buy Time Warner Cable for $56 Billion

John Malone's Charter Communications Inc. has agreed to buy Time Warner Cable Inc. for $56 billion. The Federal Communications Commission has already served notice to the two U.S cable operators that it would be following and scrutinizing the deal to make sure that the combination of the two companies does not hurt the public.

"The Commission will look to see how American consumers would benefit if the deal were to be approved," FCC Chairman Tom Wheeler said in a statement. "In applying the public interest test, an absence of harm is not sufficient."

Charter will be offering about $195.871 cash-and-stock for each Time Warner Cable share. Reuters reported that when including debt, the deal is valued at $79 billion.

The merger between Charter and Time Warner Cable creates a single company that will have control over more than 20 percent of the broadband market within the U.S., research firm MoffettNathanson stated.

"With our larger reach, we will be able to accelerate the deployment of faster Internet speeds, state-of-the-art video experiences, and fully-featured voice products," Charter CEO Tom Rutledge said in a statement.

Time Warner Cable shares went up 7.4 percent at $184.59 in premarket trading on Tuesday. Charter's stock increased about four percent at $182.14.

Charter had offered Time Warner Cable $37 billion last year, which Time Warner Cable rejected. Comcast passed up on the opportunity to buy Time Warner Cable at $45 billion last month due to regulatory concerns.