WideOpenWest, the Denver-based overbuilder controlled by private equity giant Avista Capital Partners, has agreed to purchase West Point, Ga. overbuilder Knology in a cash deal valued at $1.5 billion.
The deal comes in at the high end of Knology's expected price range. When the company went on the auction block in February, most observers believed it would attract prices ranging from $1 billion to $1.5 billion.
The deal represents a 9% premium to Knology's share price on April 17 of $18.05 per share. Knology shares soared by more than 7% ($1.30 each) to $19.35 per share in early trading Wednesday after the deal was announced.
"Our two companies have much in common," WOW chairwoman and CEO Colleen Abdoulah said in a statement. "We share similar beliefs in how employees and customers should be treated, and we both know how to succeed in competitive environments. WOW! and Knology are a natural fit; together, our people, network and operating infrastructure will combine to provide a strong platform for continued growth."
WOW! operates in Michigan, Illinois, Ohio and Indiana, while Knology serves the southeastern and midwestern United States. The combined entity will have over 800,000 customers, and its products and services will be available to more than 2.8 million households in 13 states.
"Since its founding in 1995, Knology has been a leader in the communities we serve," said Knology chairman and CEO Rodger Johnson in a statement. "We are proud of our team's accomplishments over the years, from our company-wide focus on serving our residential and commercial customers to the creation of significant shareholder value. We look forward to working with WOW! to build an even stronger business."
The deal is subject to customer closing conditions including approval by a majority of Knology's shareholders.
Credit Suisse and Bank of America Merrill Lynch acted as the financial advisers to Knology and and Hogan Lovells US LLP acted as its legal adviser. Alston & Bird LLP acted as legal advisor to Knology. Morgan Stanley acted as sole financial adviser and Kirkland & Ellis LLP acted as legal adviser to WOW!. Credit Suisse, Morgan Stanley, RBC Capital Markets, SunTrust Robinson Humphrey and Bank of Tokyo-Mitsubishi UFJ have provided fully committed debt financing in connection with the transaction.