August 15, 2016

TPG Capital said it has agreed to acquire two regional broadband services providers- RCN Telecom Services, LLC and Grande Communications Networks LLC -from ABRY Partners for a combined total of $2.25 billion to create a top-rated U.S. broadband company.

The deal, which reflects TPG’s strategy of zeroing on unique opportunities and partnering with companies that are on the cutting edge of evolving industries, will enable the firm to use the new entity to shake-up reigning cable and telecom operators status quo and so-called ‘better value’ deals by providing alternative services of fast, affordable and reliable internet services to customers in regional markets through RCN and Grande.

Speaking about the deal, David Trujillo, Partner at TPG said “the way that content is distributed and consumed has evolved significantly in ways that create an overwhelming demand for affordable, high-speed cable networks. There is an unprecedented amount of diverse, creative content being produced that is extremely bandwidth intensive. 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”

TPG Capital, which is the global private equity funds of alternative asset firm TPG, paid $1.6 billion and $650 million for RCN and Grande, respectively, and plans to use the combined assets to create a high-quality cable and next generation high-speed data company that will provide reliable data services as well as better customer services to U.S. residential and business customers.

Both RCN and Grande are main local broadband providers in regional markers including Austin, Boston, Chicago, Dallas, Lehigh Valley, New York, Pennsylvania, San Antonio, and Washington, DC, providing both residential and business customers with high quality, high speed networks of full suite of internet, video, and phone services.

TPG, which investments in content creation and distributions companies as well as internet and digital media includes sports and entertainment intermediary CAA, Spotify, STX, Univision, Airbnb, Ipsy, RentPath, and Uber, said as part of the deal with ABRY, it is also partnering with industry-leading management team, Patriot Media-headed by Steve Simmons and Jim Holanda, that currently manages both RCN and Grande, and will continue to invest in essential network and technology infrastructure that will allow the new entity to expand its Gigabit per second high-speed data services, creating the premier internet experience in their markets.

PJT Partners, UBS, Cleary Gottlieb, and Deloitte advised TPG on the transaction. ABRY, Patriot Media, RCN, and Grande were advised by Credit Suisse, Kirkland & Ellis, Locke Lord and PwC.

The transaction is expected to close in the first quarter of 2017 and is subject to customary closing conditions, including regulatory approvals.

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