Time Warner Cable has reached an agreement to purchase cable systems owned by NewWave Communications in Kentucky and western Tennessee.
The deal -- encompassing 70,000 basic video subscribers, 42,000 high-speed data customers and 26,000 telephony subs - was for $260 million in cash, according to the parties. With it, Time Warner Cable marks its initial entry into Tennessee, while bolstering its presence in Kentucky where it currently serves just under 100,000 customers. An MSO spokesman said the systems in northwestern Tennessee abut its operation in the southern part of the Bluegrass State.
The deal is expected to close in the fourth quarter.
RBC Daniels acted as exclusive financial advisor and K&L Gates LLP acted as legal advisor to NewWave, which is exiting those states, on this transaction. Edwards, Angell, Palmer & Dodge LLP served as legal advisor to Time Warner Cable.
"This deal is yet another example of our disciplined approach to capital allocation and M&A. Taking into account a full tax step-up and significant operational synergies, the deal enables us to expand our cable footprint at a purchase price that compares favorably with Time Warner Cable's current trading multiples," said Rob Marcus, president and COO, Time Warner Cable in a statement. "We look forward to serving these customers and bringing to them all the dynamic products and services Time Warner Cable has to offer."
Upon completion of the deal with the nation's No. 2 cable operator, NewWave, founded by its management team and Pamlico Capital in 2003, will continue to serve 80,000 customers in Illinois, Indiana, Missouri and Arkansas. That total reflects NewWave's April 15 purchase of Avenue Broadband, which served 54,000 cable, voice and data customers in Illinois and Indiana.
"NewWave acquired many of these properties as long ago as 2003 and this transaction allows NewWave to realize a return for our investors, while allowing our team to concentrate on our ongoing operations in our other service areas," said NewWave CEO Jim Gleason. "We're very pleased to work with Time Warner Cable on this transaction and we are sure they will be a great company for our communities and employees. The NewWave team has done a tremendous job of improving the overall products and service to our customers in Kentucky and Tennessee since acquiring these systems and we thank them for their efforts."