About two months after it was put on the block, TPG Capital sold its Astound Broadband cable systems with more than one million customers to a joint venture between private equity firm Stonepeak Infrastructure Partners and Patriot Media in a deal valued at $8.1 billion including assumed debt.
TPG put Astound -- a combination of RCN, Wave Broadband and Grande Communications -- up for sale in September, reportedly asking about $8 billion for the assets. TPG purchased the assets in three separate deals, agreeing to pay $2.25 billion for RCN and Grande in 2016, and completing its $2.36 billion purchase of Wave in 2018. They purchased Entouch in September, adding 22,000 customers.
According to reports, Stonepeak and Patriot are ponying up about $3.6 billion in cash for the assets and assuming $4.5 billion in debt, putting the total price tag at $8.1 billion.
Patriot Media is led by long-time cable executives Steve Simmons and Jim Holanda, and currently manages Astound. It will continue to run the properties after the deal closes, expected in the second quarter of 2021.
Astound, consisting of RCN, Grande, Wave and enTouch, is the sixth largest cable operator in the country, serving more than one million customers with 23,000 miles of fiber across Chicago, Eastern Pennsylvania, Massachusetts, New York City, Northern California, Oregon, Texas, Washington, DC., and Washington.
“We are delighted to partner with Steve, Jim and the Astound team for the next chapter of growth. Astound is the premier operator of critical broadband infrastructure in the United States with a long history of delivering market leading customer service and network performance to communities across the country. In our increasingly connected society, we believe there is an extraordinary opportunity to deliver faster speeds and greater coverage, fundamentally enabling many aspects of everyday life,” Stonepeak partner Brian McMullen said in a press release.
As part of the partnership with Stonepeak, Patriot Media said it will continue to invest significantly in the network and in technology.
“We have created a market leading broadband platform with national reach, broad capabilities and expertise, and exciting growth potential,” Astound CEO Holanda said in a press release. “We are very eager and excited to partner with a premier investor such as Stonepeak to further accelerate our growth and take our companies to new levels of customer satisfaction and performance. We also want to thank TPG for their great support and partnership over the past four years.”
Simmons formed Patriot Media in 2002 after buying RCN’s Princeton, N.J., systems with private equity company Spectrum Equity Associates. He grew the operator to about 350,000 subscribers before selling it to Comcast for $483 million in 2007. Three years later Simmons and Patriot took over management of RCN and Grande, after they were purchased by Abry Partners, staying on in that role when Abry sold the properties to TPG in 2017.
“As we continue to grow our platform, our core objectives remain the same: to deliver exceptional service to our customers and communities, a best-in-class experience for our employees, and outstanding results for our investors,” Simmons said in a press release. “Our mission and management vision are aligned with Stonepeak and we very much look forward to our partnership with them.”
BofA Securities and Lazard are acting as financial advisors to Stonepeak, and Simpson Thacher & Bartlett LLP is serving as legal counsel. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are acting as financial advisors to Astound, and Cleary Gottlieb Steen & Hamilton, LLP and Seyfarth Shaw, LLP are serving as legal counsel.
“We’ve had a long-held theme and belief in the growing value of broadband infrastructure, culminating in our successful investment in Astound Broadband, in partnership with Patriot Media,” said David Trujillo, partner at TPG. “We’re proud to have been part of the company’s journey, which has been characterized by significant platform expansion, strong growth and great leadership. We wish Steve, Jim and the outstanding Patriot management team well, as they continue to grow Astound in partnership with Stonepeak.”
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Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.