Georgia-based overbuilder Knology is close to a deal to acquire independent cable operator Sunflower Broadband for an estimated $127 million, according to sources familiar with the matter.
Sunflower, based in Lawrence, Kan., has about 30,000 cable and telephone subscribers in Lawrence, Eudora and Douglas counties. The company has been one of the leaders on the technology scene - it was one of the first cable operator to deploy DOCSIS modems in 1995 and launched digital cable in 1998. In 2001, Sunflower launched telephone service.
Publicly traded Knology, which has about 600,000 residential customers in Florida, South Dakota, Georgia, South Carolina, Alabama and Tennessee, has been in the middle of an aggressive expansion plan. The company launched its "edge out" program last year,extending cable and broadband service on the fringes of its existing franchise areas. And the company is no stranger to acquisitions - in 2007 it purchased Sioux Falls, S.D. -based PrairieWave Holdings, with about 57,000 customers for $255 million and Dothan, Ala.-based Graceba Total Communications for about $75 million. Knology was also said to be among the early bidders for Bresnan Communications,which agreed to be purchased by Cablevision Systems in June for $1.4 billion.
According to sources familiar with the matter, Sunflower went on the block about two months ago. Sunflower was formed in 1970 and is owned by The World Company, which also owns the Lawrence-Journal World newspaper.
According to an executive in the cable financial community, a handful of companies have looked at Sunflower, but Knology quickly rose to the front.
"They are certainly the lead horse," the executive said.
Estimates are the final price will be between 8 times to 8.5 times Sunflower's estimated cash flow of $15 million annually. That would make the deal worth between $120 million and $127.5 million. Bresnan sold for about 8.3 times cash flow.
Officials at Knology and Sunflower did not return calls for comment.