BC Partners, Canadian pension fund to buy U.S. cable operator Suddenlink

July 19
3:04 PM 2012

Private equity firm BC Partners and one of Canada's top pension funds are joining forces with the management of Suddenlink Communications to buy out the U.S. cable operator in a deal worth about $2.5 billion.

The U.S. cable sector has seen some of the largest buyout deals of the last two years as firms have swooped in to acquire cable companies that offer the promise of revenue growth and steady cash flows.

In August last year, Time Warner Cable bought cable operator, Insight Communications from Carlyle Group for $3 billion to grow its reach in the U.S. Midwest.

Earlier on Wednesday, Cogeco Cable Inc, a Canadian company that serves mostly rural customers in the provinces of Ontario and Quebec, said it would pay $1.36 billion to buy U.S. cable operator Atlantic Broadband, in a move aimed at gaining a foothold in the larger U.S. market.

In the Suddenlink deal, BC Partners and the Canadian Pension Plan Investment Board said they are teaming up with U.S. cable industry veteran Jerry Kent to buy Suddenlink from Goldman Sachs Capital Partners, Quadrangle and Oaktree Capital Management.

The deal includes a $1.99 billion equity investment, along with incremental debt of $500 million. Including the assumption of existing debt, the deal puts Suddenlink's enterprise value at $6.6 billion.

Suddenlink offers cable, Internet and telephone services to more than 1.4 million residential and commercial customers in Texas, West Virginia, North Carolina, Oklahoma, Arkansas and Louisiana. It is the seventh-largest U.S. cable operator with annual revenues of around $2 billion and 6,000 employees.

Kent, Suddenlink's chairman and chief executive, said the deal will allow his team to continue investing in new technology and infrastructure.

"Cable is an industry we know well in both Europe and the United States" added BC Partners managing partner Raymond Svider, adding that the cable sector "epitomizes the defensive growth characteristics" that the firm typically seeks in an investment.

This article is copyrighted by Reuters

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