Knology said Tuesday that it has agreed to purchase Cobridge Broadband systems in Fort Gordon, Ga., and Troy, Ala., for $30 million, adding that acquisitions will play a role in future growth.
Knology already has been an aggressive buyer of systems - it closed on a $165 million deal to purchase Sunflower Broadband last year. The Cobridge deal will add another 21,000 connections to Knology and is contiguous to the overbuilder's existing systems in Georgia and Alabama.
Cobridge, led by former Broadwing Communications CEO Scott Widham, was in the news last year when it purchased 65,000 customers in seven states from Charter Communications.
Knology said it will use about $10 million of cash on hand and $20 million from its existing credit facility to finance the Cobridge deal. The Cobridge systems have about $15 million in annualized revenue and $5.5 million in annualized earnings before interest, taxes, depreciation and amortization, valuing the deal at under 6 times cash flow.
On a conference call with analysts to discuss fourth-quarter financial results, Knology president Todd Holt said that the overbuilder has sufficient firepower for more deals.
"We have the capacity to do nice sized deals without issuing equity and experiencing dilution," Holt said. "There are no guarantees we will get to the finish line on potential transactions, but we continue to believe that M&A will continue to play a role in our continued growth."
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