Sources: Two Equity Firms Lead Auction for Knology3/26/2012 12:01 AM Eastern
The auction for overbuilder Knology
has entered the second round, with two privateequity
firms emerging as the lead bidders, including
Avista Capital Partners, according to sources in the
is familiar with
in its estimated
$800 million recapitalization in 2005. Knology could
fit well into its portfolio.
Another large private-equity firm also is said to be
in the running for the assets, but its name couldn’t
be determined at press time.
Officials at Avista and Knology did not return calls
According to sources in the cable financial community,
Knology has been making management presentations
to the two bidders over the past few weeks
and could make its final decision soon.
Knology has about 795,349 voice, video and data
customers in nine states and went on the auction
block in late February.
Credit Suisse and Bank of America Merrill Lynch
are shopping the company in hopes of getting as
much as $1.5 billion. Miller Tabak media analyst David
Joyce said a reasonable price could be 7.5 times
to 8 times annual cash flow, valuing the competitive
triple-play provider at $1.4 billion to $1.5 billion.
Knology had a stock bump after The Wall Street
Journal first reported it was on the block in late February.
The stock went up as much as 22% ($3.53) to a
new 52-week high of $18.34 on Feb. 28.
At $18.03 per share last Friday afternoon (March
23), Knology’s market capitalization was about $685
Also testing the deal waters are cable firms Wave
Broadband and Allegiance Communications.
Wave, advised by Waller Capital Partners and RBC
Capital Markets, has entered the first round of the
auction process, with books going out to prospective
suitors last week.
Allegiance, with more than 40,000 subscribers
in Arkansas, Kansas, Missouri, Oklahoma and
Texas, has drawn interest from Zito Media, the Coudersport,
Pa., cable company owned by James Rigas,
sources said. Allegiance is owned by New Yorkbased
private-equity fund The Wicks Group of Cos.
NewBay Media, parent company of Multichannel
News, is an affiliate of The Wicks Group.
Headquarters: West Point, Ga.
Markets: 13 (Alabama, Florida, Georgia,
Iowa, Kansas, Minnesota, South Dakota,
South Carolina, Tennessee)
Total Residential Connections: 677,213
Business Connections: 118,136
2011 Revenue: $518.6 million
SOURCE: Company reports