In a move that further consolidates the U.S. cable business, mid-sized operators RCN and Grande Communications have been sold from one private equity firm to another, with Texas-based private-equity firm TPG Capital paying $2.25 billion to acquire the two operators from Boston-headquartered ABRY Partners.
In its press release confirming the widely rumored deal, TPG said that it will partner with Patriot Media, the management team headed by Steve Simmons and Jim Holanda that currently manages both RCN and Grande.
TPG, however, intends to combine both operators. The firm is buying them in two separate transactions — it’s paying $1.6 billion for RCN Telecom Services and $640 million for Grande.
With high-density video quickly ramping up broadband traffic, and cable positioned to cash in, TPG said it’s the right time to invest in the U.S. cable business.
“The way that content is distributed and consumed has evolved significantly in ways that create an overwhelming demand for affordable, high-speed cable networks,” said David Trujillo, a partner at TPG.
“There is an unprecedented amount of diverse, creative content being produced that is extremely bandwidth intensive,” Trujillo added. “Consumers are craving access to that content through various internet-connected devices in the home all at once. 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.”
The two private equity firms expect the deal to close in the first quarter of next year.
Based in Princeton, N.J., RCN serves Boston, Chicago, New York, Philadelphia and Washington, D.C. San Marcos, Texas-based Grande serves Texas and the Southwest. Both operators use the same TiVo-powered video services platform.