Cable M&A set a high bar this year, with transactions occurring at impressive premiums. The jury’s out on whether these kinds of multiples can continue. Here’s a look at the top 5 deals from the past 12 months:
- Suddenlink’s buyout deal: Value $6.6bln. Under contract. The buyout of the ownership stake of Cequel and other equity holders comes from British private equity firm BC Partners, Canadian Pension Fund and members of Suddenlink’s management team. The deal represents a multiple of approximately 8.6x the company’s first quarter ’12 annualized EBITDA before non-recurring expenses. Suddenlink has more than 1.4 residential and commercial customers, primarily in Texas, West Virginia, North Carolina, Oklahoma, Arkansas and Louisiana. Suddenlink chmn/CEO Jerry Kent has said the capital infusion allows the MSO to continue to invest and infrastructure and technology, but also re-opens the possibility of acquisitions.
- Time Warner Cable’s purchase of Insight: Value $3bln. Closed Feb ’12. With some 680K subs in Ohio, Indiana and Kentucky, the price per sub comes out to about $4K. The EBITDA multiple is estimated at about 8x ’11 EBITDA, and comes on the heels of TWC’s $260mln acquisition of New Wave (KY operator with 70K subs). Speaking at an investor conference this week, TWC COO Rob Marcus said the integration process has gone “exceptionally well,” with programming costs benefits already in place. TWC has said it expects to pick up $100mln in annual synergies from Insight and is already two-thirds of the way there. To do: moving Insight subs from the legacy HSD and voice platforms to TWC’s and some “other relatively mechanical things.”
- WOW!’s acquisition of Knology: Value $1.5bln. Closed July ’12. Knology had 275K customers in Alabama, Florida, Iowa, Kansas and Tennessee. The value implies a multiple of about 7.65 forward EBITDA. In this overbuilder marriage, Knology pres/CFO Todd Holt stayed on as CFO at the combined company. "It helps [that WOW! is a fellow overbuilder] because we have that same competitive mentality. We have the same newer, robust networks. The same focus on customer service. We’re both the guys who have been most successful going out there and competing with the large MSOs and the large telcos," Holt said.
- Canadian operator Cogeco’s purchase of Atlantic Broadband: Value $1.36bln. Under contract. Atlantic, privately owned by Abry and Oak Hill Capital, has 252K basic customers in PA, MD, DE, SC and Miami. The deal implies an 8.3x EBITDA multiple. The management team of Ed Holleran and Dave Keefe are expected to be in place. And the deal offers further evidence of US cable’s hot streak. “Atlantic Broadband—with weaker systems in a weaker state of repair [than WaveDivison]–was acquired by Cogeco, a Canadian operator that brings no particular synergies to the table and simply wanted to be in the U.S. cable market,” Bernstein Research’s Craig Moffett said at the time of the deal’s announcement.
- Oak Hill Capital Partners and GI Partners purchase of WaveDivison: Value estimated at $950mln or 8x ’12 EBITDA (private). Under contract. With 385K RGUs, Wave is estimated to be changing hands at about $2467 per RGU. Oak Hill and GI are purchasing Wave from Sandler Capital and other investors. Wave serves the suburban markets of Seattle, San Francisco, Sacramento and Portland, and operates under the names Wave Broadband and Astound. Named CableFAX’s ’12 Independent Operator of the Year, Wave operates advanced systems in attractive markets. Just last summer, Wave bought Broadstripe’s Washington and Oregon properties, which reach more than 103K homes. On Thurs, Wave announced the acquisition of Black Rock Cable provides high-speed fiber optic connectivity services in Washington’s Whatcom, Skagit, and Snohomish counties to public and private sector commercial customers. The acquisition is conditioned on the closing of the Oak Hill-led acquisition.