Sale of Insight Stake Stokes M&A Momentum4/05/2010 1:29 AM Eastern
Almost three years after scrapping an
auction for its majority interest in Insight Communications,
Carlyle Group has decided to sell about half of its
stake in the cable operator
to an investor group headed
by cable legend Jeffrey Marcus
for an undisclosed sum.
Carlyle, which took Insight
private in 2005 in a $2 billion
equity and debt deal, agreed
to sell a 42% equity interest
in the MSO to a group led by
private-equity funds Crestview
Partners and MidOcean
Marcus, who sold his Marcus
Cable operations to Microsoft
co-founder Paul Allen in 1998, is a Crestview partner
and heads its Media and Communication group.
Carlyle Group will retain a 42% equity interest in Insight.
The deal is the third small-cable transaction to hit the
market this year and an encouraging sign that the M&A market,
stagnant for the past few years, may be coming back.
Earlier last month, RCN said it would be acquired
by ABRY Partners for about $1.2 billion, and Providence
Equity Partners began laying the groundwork
for a possible sale of its controlling stake in Bresnan
Terms of the Insight deal were not disclosed, but given
trading multiples of cable stocks of 5.5 times to 7.3 times
cash flow and an estimated debt load of about $1.3 billion,
the private-equity firms could have spent between $200
million and $400 million for their stake.
Marcus and MidOcean managing director Tyler Zachem
will receive seats on Insight’s board of directors.
Insight CEO Michael Willner and chairman Sydney
Knafel will also continue to hold a series of shares that
will let them elect a majority of board members. Insight’s
current management team remains.
Carlyle was reportedly seeking as much as $3 billion
for its interest in Insight in 2007, but pulled the
company off the market that September when bids fell
short of expectations.
Willner said that Carlyle’s decision to sell only a portion
of its interest reaffirms its commitment to the cable
“Rather than sell their stake completely, they chose a
partial sell so they can remain involved and invested here,”
Willner said. “It’s a win-win for everybody. They made room
for some new guys to come in and put new money to work
and put old money out to their partners.”