Liberty Media Corp (NASDAQ:LMCBD) has announced plans to acquire a 27.3 percent stake in the Charter Communications, Inc. (NASDAQ:CHTR), a cable service provider for $2.6 billion.

According to the agreement, Liberty will pay $95.50 per share for the stake, which totals to 26.9 million shares and 1.1 million warrants. This represents a 6 percent premium to the closing price on Friday of Shares of Charter.

Liberty will elect four directors to Charter’s board including John Malone and his top lieutenant Gregory Maffei. Further, Liberty agreed upon limiting its possible ownership stake in the charter to 35 percent until January of 2016 and 39.99 percent later.

Liberty Media logo

Through this acquisition, Liberty Media Corp (NASDAQ:LMCBD) will acquire a solid stake in one of the four biggest cable television operators in the country. As on Dec 31 2012, Charter Communications, Inc. (NASDAQ:CHTR) reported a customer base of 4 million video customers and 3.8 million residential Internet customers. Charter’s user base, to whom it provides video, Internet and Telephone services, account for approximately 5.2 million residential and business customers in 25 states of the United States.

Malone’s Liberty International agreed to buy Virgin Media Inc. (NASDAQ:VMED) for approximately $16 billion, which positioned Malone as one of the prominent players in the European cable TV market. Malone, who is also known as “the king of cable” established Tele-communication Inc, which he expanded into the largest cable operator in the United States before selling it to AT&T Inc. (NYSE:T).  Malone is also the chairman of Liberty Global Inc, the international cable operator that purchased Virgin Media Inc, a UK company, for about $15.75 billion in February.

Liberty Media Corp (NASDAQ:LMCBD) will acquire the stake from the top three holders, which include Apollo Global (NASDAQ:APOL), Oak tree Capital management (NYSE:OAK) and Crestview partners. Liberty will allow sellers to pare back the holdings they acquired, in 2009, after taking over the cable operator.

The investment firms became the owners of the Charter Communications, Inc. (NASDAQ:CHTR) after they helped the company to emerge from bankruptcy filed under Chapter 11 protection. Charters second-largest holder, Crestview LLC will reduce its stake from 9.6 percent to 7.4 percent; Oaktree Capital Group LLC (NYSE:OAK) will trim its stake from nearly 9 percent to 2.2 percent.

 “Apollo, Oaktree, and Crestview have created substantial value for Charter Communications, Inc. (NASDAQ:CHTR) and its shareholders, and on behalf of Charter’s board, we look forward to working with Liberty Media in creating further value,” Eric Zinterhofer, Charter’s chairman said in a statement.

It is expected that the deal will be concluded in April or May, and will be financed with cash on hand and new loans. Liberty was advised by LionTree Advisors and the law firm Baker Botts. Charter was counseled by the law firm Kirkland & Ellis.