Private equity firm Crestview Partners has agreed to inject US$125m in US cableco Wide OpenWest, trading as WOW, and acquire shares from majority owner Avista Capital and other smaller investors. Combined, the two transactions will give Crestview around a 35% stake in WOW, valuing the US’s ninth largest cableco at close to US$4bn, people familiar with the situation told TelecomFinance.
Private equity firm Crestview Partners has agreed to inject US$125m in US cableco Wide OpenWest, trading as WOW, and acquire shares from majority owner Avista Capital and other smaller investors.
Combined, the two transactions will give Crestview around a 35% stake in WOW, valuing the US’s ninth largest cableco at close to US$4bn, people familiar with the situation told TelecomFinance.
Avista will remain the largest shareholder in WOW when the transaction completes, most likely by the end of this year.
Jeffrey Marcus (pictured), who leads Crestview’s media practice and has experience in US cable, will become chair of WOW, Crestview’s fourth cable investment since its founding in 2004.
Marcus replaces former WOW CEO Colleen Abdoulah in the role, who will continue to serve as a director on the company’s board.
“We know this industry quite well and believe, through this new partnership and given our extensive experience, we can help drive additional value creation while continuing to build on WOW’s outstanding customer experience,” Marcus said.
WOW CEO Steven Cochran commented: “The investment by Crestview, together with the continued support of Avista, will help WOW to further capitalise on future growth opportunities while continuing to deliver the award-winning customer experience for which we are known.”
Credit Suisse was financial adviser to WOW and Avista, while Kirkland & Ellis was their legal adviser.
Paul, Weiss, Rifkind, Wharton & Garrison provided legal advice to Crestview.
WOW’s network passes three million households and it has declared 782,000 residential, business and wholesale customers across Illinois, Michigan, Indiana, Ohio, Kansas, Maryland and the Southeast.
It has in recent years made a number of bolt-ons, including Bluemile for US$20m in 2013, Broadstripe for US$55m in 2011, and Sigecom for US$120m in 2006, according to data from S&P Capital IQ.
According to WOW’s Q3 results announced in November, total revenue for the 12 month period ended 30 September was US$1.23bn and adjusted EBITDA for the same period was US$440m.
WOW’s near-US$4bn valuation suggests an EV/EBITDA multiple higher than the 7.6x synergy-adjusted multiple Altice agreed to pay for another US cableco, Suddenlink, earlier this year.
Altice and John Malone-backed Charter Communications have both been blazing a trail in US cable acquisitions, positioning smaller regional players such as WOW as ripe for the picking.
In addition to Suddenlink, Altice has agreed to buy New York cableco Cablevision Systems (NYSE:CVC), while Charter is looking to win regulatory approval for its planned US$66.4bn takeovers of Time Warner Cable (NYSE:TWC) and Bright House Networks.