The deal values each Time Warner Cable share at about $195.71 based on Charter's closing price on May 20, the companies said in a joint statement on Tuesday. The transaction will include a $2 billion breakup fee.
Charter also announced it would acquire Bright House Networks, the sixth largest U.S. cable company, for $10.4 billion. The combined companies could have as many as 23 million total customers, just behind Comcast's 27.2 million customers.
Bright House and Charter had extended their merger talks after Comcast's deal with Time Warner Cable fell through. Charter's previous agreement with Bright House was contingent on Comcast's completion of the buyout of Time Warner Cable.
CNBC's David Faber reported details of the impending deal between Charter and Time Warner on Monday.
The announcement comes a month after Comcast dropped plans to purchase Time Warner Cable for about $45 billion. That deal faced challenges from the Federal Communications Commission, which was concerned the combined companies would exercise to much control over broadband Internet networks.
A merger of Charter and Time Warner Cable, with other related deals, would eliminate one of the country's top Internet providers and control more than 20 percent of the broadband market, according to data from MoffettNathanson.
The Comcast-Time Warner Cable deal rejected by regulators would have created a provider with roughly 40 percent of the U.S. high-speed Internet market.
Charter hopes its deal for Time Warner Cable will be viewed more favorably by regulators. Federal Communications Commission Chairman Tom Wheeler reached out to the chief executives of the two companies last week to convey that the agency is not opposed to any and all cable deals, The Wall Street Journal reported. Any deal would be considered on its own merits, the paper quoted Wheeler as saying
—CNBC's David Faber and Reuters contributed to this story.
—Disclaimer: Comcast owns NBCUniversal, the parent company of CNBC and CNBC.com.
This story originally appeared on CNBC.com