West Point, Ga.-based overbuilder Knology said Wednesday that it has signed a definitive agreement to purchase Sunflower Broadband for $165 million in cash.
Multichannel Newsfirst reported that the two were close to a deal last week.
According to the agreement, which is expected to close during the fourth quarter of this year, Sunflower will contribute about $51 million in revenue and $22 million in cash flow. At the $165 million price tag, the deal values Sunflower at about 7.5 times 2010 estimated cash flow.
Knology has about 600,000 residential voice, video and data subscribers in Florida, South Dakota, Georgia, South Carolina, Alabama and Tennessee. With the Sunflower deal, the overbuilder adds about 51,000 homes passed and around 105,000 revenue generating units in Lawrence, Eudora and Douglas counties in Kansas.
SunTrust Robinson Humphrey is acting as financial advisor to Knology and RBC Daniels is acting as financial advisor to Sunflower Broadband. Credit Suisse and SunTrust Robinson Humphrey have fully committed to provide the required debt capital for the contemplated acquisition by Knology of Sunflower Broadband.
Knology reported the transaction in a second-quarter earnings release.
"We are pleased with both the financial and operating results achieved during the second quarter, and we are very excited about the Sunflower transaction and what that transaction will mean to our business on a long term basis,"
Knology chairman and CEO Rodger L. Johnson said in the release. "The core business is continuing to perform well in this challenging economic environment, and we continue to experience success with our fill-in investments and wireless backhaul opportunities. We will stay focused on taking care of the customer and working hard to deliver increased shareholder value."
Knology president and CFO M. Todd Holt said in the release: "The free cash flow profile of the business remains very healthy, and along with a solid balance sheet, positions the company for disciplined growth on a go forward basis. We are fortunate to be in a position to add the Sunflower asset to the Knology operations without putting pressure on our balance sheet. The Sunflower team is going to be a great fit with Knology and together we will create an even stronger organization."
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.