Canadian Bank Buys Daniels

After nearly 50 years as an independent investment banker for the cable industry, Denver-based Daniels & Associates last week agreed to be acquired by RBC Capital Markets, a Royal Bank of Canada company looking to further expand south of the border.

The sale of Daniels — formed in 1958 by cable pioneer Bill Daniels, who died in 2000 — means two independent cable investment-banking firms remain: New York based Waller Capital and DH Capital.

Communications Equity Associates of Tampa, Fla., another long-time cable-systems broker, has considerably scaled back cable banking operations.

Terms weren't disclosed, but Daniels chairman and CEO Brian Deevy said it was “safe to assume” the firm was sold for a combination of cash and RBC stock. He said Daniels is owned by 25 individuals in the firm.

Deevy will be CEO of RBC Daniels, as the company will be called after the merger closes in the first quarter of 2007. President and chief operating officer Brad Busse will retain that role at RBC Daniels.

With RBC Capital backing, Daniels can approach clients with a package of products, including corporate bonds, high-yield bonds, bank loans and initial offerings of stock to public investors, Deevy said.

“The fact is that before, if we were doing a deal and financing needed to be done to get the M&A deal closed, we simply had to say, 'You're going to have to find your financing yourself,' ” Deevy said. “We'll chase the same M&A deals we've always chased. If there's a financing need, now we have an in.”

Deevy will report to RBC Capital head of U.S. Investment Banking Peter de Vos, who spoke in an interview about gaining an inroad into the U.S. communications banking market, particularly with companies worth up to $2 billion.

De Vos said RBC just needed more “talented origination bankers,” and 30 will be coming over to RBC via Daniels. All of Daniels's 40-plus employees will come over to RBC, he said.

RBC Capital currently has about eight cable investment bankers in the U.S. Overall, 190 people in the U.S. report to de Vos, including about 165 investment bankers.

Daniels's biggest cable deals over the years include two in 1999 by then-expanding Adelphia Communications: the $5.2 billion purchase of Century Communications and the $2.1 billion purchase of FrontierVision Partners.

This year, Daniels represented Cox Communications in the $2.55 billion sale of 944,000 subscribers in the Southeast to Cebridge Connections (now Suddenlink Communications) and represented Charter in the $770 million sale of 244,000 subscribers in West Virginia and Virginia to Suddenlink.