Canadian cable operator Cogeco Cable has agreed to purchase Quincy, Mass.-based MSO Atlantic Broadband for $1.36 billion in cash.
Atlantic Broadband has about 252,000 video customers in Pennsylvania, Florida, Maryland, Delaware and South Carolina. The company is headed by CEO David Keefe and president and chief operating officer Ed Holleran, who formed ABB with backers ABRY Partners and Oak Hill Capital Partners in 2003. The systems have been on the block since June.CogecoThe purchase price works out to be about 8 times estimated 2012 cash flow of $169 million, in line with most observers' expectations.
The deal is the latest in a string of private cable deals that have garnered strong prices. In FebruaryTime Warner Cable closed on its purchase of Insight Communications for $3 billion (about 8 times cash flow) and WideOpenWest completed its $1.5 billion acquisition of Knology on July 17,representing a cash flow multiple of about 7.3 times.
Publicly traded Cogeco Cable -- its stock is listed on the Toronto Stock Exchange under the symbol CCA -- currently has about 870,000 cable subscribers, primarily in the Canadian provinces of Ontario and Quebec. The Atlantic Broadband deal will give the company its first operations in the United States and lift its total cable customer rolls to 1.1 million. The deal is expected to close by the end of the year.
Cogeco Cable stock traded down on the deal news Wednesday. In March, Cogeco sold, for $59 million, a Portugese cable operator it had bought in 2006 for $656 million, according to reports.
"This acquisition marks an attractive entry point into the U.S. market for Cogeco Cable," CEO Louis Audet said in a statement about the ABB acquisition. "There are sizable opportunities for growth including: increasing the penetration of the small and mid-sized business segment, and maximizing the bundling potential of services in the residential sector. We are very pleased to welcome all the employees of Atlantic Broadband into our organization."
Gleacher and Company Securities Inc. is acting as exclusive financial advisor. Bank of America Merrill Lynch is serving as sole lead arranger and providing the committed debt financing at Atlantic Broadband. Stikeman Elliott S.E.N.C.R.L., s.r.l, Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal advisors in connection with this transaction.