GCI Liberty, the asset-based stock formed from the combination of Alaskan cable company GCI, Inc. and Liberty Interactive, enjoyed a fairly uneventful first trading day on the NASDAQ Stock Exchange Monday, closing at $54.73 per share, up 44 cents each or about 1%.
Liberty Interactive first announced it would purchase GCI in April – it completed the deal March 9 – and in typical Liberty fashion, it was a complicated one. Liberty Interactive – now Qurate Retail Group – purchased GCI, but in a tax-free transaction spun the cable company out to yet another Liberty tracking stock, Liberty Ventures. The deal benefits Liberty Interactive by transforming it into an asset-based equity which allows it to be included in major stock indices, and it creates a more robust currency for other deals and for management compensation. For GCI, it gets a big-pocketed backer and the resources to possibly roll up more cable companies across the country.
GCI Liberty opened March 12 at $54.29 per share, climbing as high as $55.47 before closing at $54.73 each
“As part of a larger company, GCI will be even better positioned to compete, innovate, and serve Alaskans and our customers nationwide," said GCI CEO Ron Duncan in a statement. "I am deeply proud of the contributions that GCI employees have made, and will make, to Alaska's development as the 49th state. All of us at GCI are grateful for our customers' support over the years, and we will continue to work hard to retain that support in the years ahead."
As part of the transaction, certain assets of Liberty Ventures were transferred to Liberty Interactive, including $1.04 billion in cash, florist FTD, ILG (parent of travel company Interval International) and tax benefits.
Most analysts see GCI Liberty, which trades under the symbol “GLIBA” as a cheaper way to own Charter Communications stock. Liberty owns a minority interest in Charter through its Liberty Broadband tracking stock, and most analysts expect a GCI Liberty/Liberty Broadband merger in the next 12-to-18 months.
“While Liberty Broadband still offers the most straightforward way to obtain Charter at a discount (11% at current market prices), GCI Liberty offers investors willing to accept a bit more complexity and lower liquidity the opportunity to create Charter at a 21% discount,” Evercore ISI media analyst Vijay Jayant wrote in a note to clients.