As expected, Cebridge Connections, the St. Louis-based cable operator headed by Jerry Kent, has reached an agreement to purchase 900,000 subscribers from Cox Communications Inc.
Although deal terms were not disclosed, analysts had expected the systems to sell for about $2,500 per subscriber, which would put the value of the deal at around $2.25 billion. That is about one-half the $4 billion Cox paid for the systems in 1999, when it purchased TCA Cable TV Corp.
The systems are located in secondary markets in Texas; North Carolina; Humboldt County and Bakersfield, Calif.; Louisiana; Arkansas; Oklahoma; Mississippi; and Missouri. Excluded from the sale are some operations serving the northwest Arkansas and Lafayette, La., areas.
The deal is expected to close in the second quarter of 2006, and it will make Cebridge the eighth-largest MSO in the country, tripling its size from 400,000 subscribers to 1.3 million. Cebridge also expects to take on about 2,300 employees from the Cox systems, increasing its total employment from 1,300 to 3,600.
Cebridge was started by Kent in 2003 as part of his private investment group, Cequel III LLC. Kent started Cequel in 2002, months after he resigned as CEO of Charter Communications Inc. in September 2001 after a well-publicized falling out with Charter chairman Paul Allen.
Kent wasted little time in growing his cable footprint, buying Classic Cable Inc.’s 325,000 subscribers in 2003 and adding systems from Shaw Communications Inc., Alliance Communications Partners and others in subsequent years.
Cebridge was long believed to be the front-runner for the properties because of its large concentration of customers near the Cox systems in Texas, Illinois, Indiana, Arkansas and Missouri.
“The Cox systems are strong, well-run properties that offer considerable synergies with our existing operations -- synergies that will help us to accelerate our efforts to deliver world-class service to our customers,” Kent said in a prepared statement.
Cox put the systems on the block in March in order to help reduce some of the debt its parent, Cox Enterprises Inc., incurred last year when it bought the remaining 38% of Cox Communications’ publicly traded stock it didn’t already own for about $8.5 billion.
Citigroup Global Markets, Lehman Bros. Holdings Inc. and JPMorgan Securities Inc. advised Cox on the system sale.