TPG to Buy RCN and Grande Communications for About $2.25 Billion
August 14 2016 - 10:50PM
Dow Jones News
Private-equity firm TPG has agreed to buy cable-television
providers RCN and Grande Communications for about $2.25 billion
including debt, according to people familiar with the matter, in a
bet that demand for new broadband services will fuel growth in the
businesses.
Google Capital, Alphabet Inc.'s growth-equity investment fund,
is taking a minority stake in the companies, which are currently
owned by private-equity firm Abry Partners, some of the people
said. The transactions could be announced Monday, they said.
RCN provides cable, phone and internet service on the East Coast
and in Chicago, while Grande specializes in such services in
Texas.
Demand for broadband internet service is rising and that has
helped spark a wave of consolidation among companies seeking to
better position themselves to capture the growth. Notable moves
include Charter Communications Inc.'s agreement to buy Time Warner
Cable Inc. and Bright House Networks, Altice NV's agreement to buy
Suddenlink Communications and Cablevision Systems Corp., and phone
giant AT&T Inc.'s purchase of satellite provider DirecTV.
Grande and RCN have shared management and other resources since
Abry agreed to buy the two companies in 2009 and 2010,
respectively. Their management, including Chief Executive Jim
Holanda, will stay on, the people said.
TPG has done a number of deals in technology, media and
telecommunications in recent years. It joined with Goldman Sachs
Group Inc. in 2007 to buy Alltel Corp. and sold the telecom concern
to Verizon Wireless two years later.
More recently, TPG has also been known for backing fast-growing
startups such as car-hailing app Uber Technologies Inc.,
rental-room marketplace Airbnb Inc. and music streaming site
Spotify AB. It was a bidder for Yahoo Inc., which Verizon
Communications Inc. recently agreed to buy.
The firm has sought investments tied to changing consumer
behavior involving online media and other digital content,
investing in Ipsy, a cosmetics startup that relies on YouTube for
marketing, and online-education company Lynda.com Inc., which
LinkedIn Corp. bought.
Google Capital tends to focus on later-stage companies that are
"harnessing long-term technology trends," according to its
website—in contrast to Google Ventures, which places bets on
early-stage startups.
Google Capital's investment might have relevance for Alphabet's
broadband unit Google Fiber, which is rethinking its approach to
building high-speed networks after its initial rollouts proved more
costly and time-consuming than expected. RCN and Grande, like
Google Fiber, are "overbuilders," meaning they've built networks
over existing cable lines to compete against incumbent
providers.
Jack Nicas contributed to this article.
(END) Dow Jones Newswires
August 14, 2016 22:35 ET (02:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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