A regional MSO power and a Texas-centric player are getting hitched, thanks to private equity firm TPG Capital.
In an announcement made this morning, TPG confirmed that it has entered into definitive agreements to acquire RCN Telecom Services LLC for $1.6 billion, and to purchase San Marcos, Tex.-based Grande Communications Networks LLC for $650 million.
Upon regulatory approval, TPG will combine the assets of RCN, which has a large footprint in Boston, Chicago, Philadelphia and the nearby Lehigh Valley region, New York City, and Washington, DC, with Lone Star-centric Grande, which serves customers in the Texas cities of Austin, Corpus Christi, Dallas, Midland-Odessa, San Antonio, San Marcos, Temple and Waco.
TPG expects the deal to close in Q1 2017, creating a top 10 U.S. cable company in the process.
To consummate the deal, TPG is partnering with Patriot Media, the consulting firm engaged in the evaluation, acquisition and management of cable investments. Patriot Chairman Steve Simmons and CEO Jim Holanda currently manage both RCN and Grande, with RCN under Patriot’s management since 2010 and Grande under Patriot’s leadership since 2013.
David Trujillo, partner at TPG, believes the “overwhelming” consumer demand for affordable, high-speed cable networks is a key reason communications companies such as RCN and Grande remain attractive.
“Consumers are craving access to content through various internet-connected devices in the home all at once,” Trujillo says. “This places never-before-seen demands on the underlying infrastructure. High-speed data has become, and will remain, the essential connection for both consumers and businesses. Both RCN and Grande are proven leaders in providing fast, affordable, and reliable data services. We look forward to partnering with the Patriot Media management team to invest in this critical communications infrastructure.”
Speaking on behalf of RCN and Grade, Holanda said, “On behalf of our 2,000 plus team members we are very eager and excited about partnering with a premier investor such as TPG to take the two companies to new levels of customer satisfaction and performance. Their deep experience creating and growing networks makes them the ideal partner to help us build on a vision of delivering the best broadband and overall customer experience.”
TPG has been a key investor in the entertainment sector for more than 10 years, partnering with sports and entertainment talent agency CAA; music streaming service Spotify; Hispanic media giant Univision; and Cirque du Soleil.
Additional investments made by TPG in the internet and digital media space include Airbnb, Ipsy, RentPath, and Uber.
TPG was advised on the transaction by PJT Partners, UBS, Cleary Gottlieb, and Deloitte. ABRY, Patriot Media, RCN, and Grande were advised by Credit Suisse, Kirkland & Ellis, Locke Lord and PwC.