|TPG Capital Backs RCN’s Acquisition of Wave Broadband for $2.365 billion|
Combination creates the sixth largest cable company in the U.S. and expands a robust high-speed broadband services platform
Transaction marks third addition to the platform, following TPG’s investment in RCN and Grande
Kirkland, Wash., Fort Worth, Texas, and San Francisco – May 22, 2017 – TPG Capital, the global private equity platform of alternative asset firm TPG, announced today that it is backing RCN Telecom Services, LLC (RCN), a nationwide broadband service provider controlled by TPG, to combine with Wave Broadband (Wave) for $2.365 billion. Currently owned by Oak Hill Capital Partners, Wave management, and GI Partners, Wave is a regional broadband fiber company offering a full suite of high-speed data, video, and voice services to residential and business customers. RCN and Wave will combine to create the nation’s sixth largest cable operator, with a diversified presence across seven of the top ten cities in the U.S. The transaction is expected to close in the second half of 2017, and is subject to customary closing conditions, including regulatory approvals.
Wave is a regional incumbent cable and broadband services provider reaching 673,000 homes and more than 1,800 unique commercial clients in Washington, Oregon, and California. The company has nearly 8,000 miles of owned fiber supporting its market-leading enterprise fiber business. Wave was founded in 2002 by Steve Weed, who will join RCN as a Director upon the close of the transaction. Wave will continue to operate as a branded entity, headquartered in Kirkland, Washington.
“Since our founding, we have been committed to providing customers with the highest quality, most reliable, and fastest data services available,” said Steve Weed, Founder and CEO of Wave. “Over the last several years we have accelerated our growth substantially by expanding from our heritage of residential broadband services into enterprise-grade fiber. Oak Hill and GI have been outstanding partners, and we are excited that our new partners, TPG and RCN, recognize the value of what we have created. We are eager to enter our next era of growth alongside them.”
In August 2016, TPG entered into definitive agreements to acquire RCN as well as Grande Communications Networks LLC (Grande) through separate transactions. The combination created a regional market leader in next-generation, high-speed data services for residential and business customers with a presence spanning the East Coast, Chicago, and Texas. The combination with Wave expands RCN’s footprint to the West Coast.
“Demand for high-speed broadband services is growing rapidly as digital content continues to proliferate,” said David Trujillo, Partner at TPG Capital. “High-quality, reliable communications infrastructure is increasingly important, and the acquisition of Wave is a transformative addition that will allow RCN to provide broadband-related services in new and growing markets. We look forward to working with RCN and Wave management to serve even more residential and business customers across the country.”
“At RCN and Grande, we pride ourselves on providing the best products, best service, and best value to our customers. Through our partnership with TPG, and by expanding our footprint with Wave, we have created a market-leading broadband platform with national reach, broad capabilities and expertise, and exciting growth potential,” said Jim Holanda, CEO of RCN and Grande. “We look forward to working with the Wave team to further accelerate our combined growth.”
“As we continue to grow our platform, our core objective remains the same: To deliver exceptional service to our customers and outstanding results for our investors,” said Steve Simmons, Chairman of RCN and member of the Cable Hall of Fame. “This combination equips RCN with additional resources and expertise to build our business and accelerate growth.”
J. Crandall, Benjy Diesbach, and Scott Baker represented Oak Hill Capital Partners on the Wave Board of Directors. Gregory VandenBosch represented GI Partners. Majority investor Oak Hill Capital Partners and GI Partners jointly stated, "We have enjoyed a tremendous partnership with Steve Weed, his management team, and the Wave employees over the past five years, and we are honored to have been a part of the company's outstanding growth story. We wish continued success to Wave under the ownership of RCN/Grande and TPG."
TPG’s investments in Wave and RCN reflect its strategy of partnering with innovative companies that are at the forefront of evolving industries. For more than a decade, the firm has been focused on the changing landscape of content creation, distribution, and consumption. Select investments include global accommodation sharing platform Airbnb; leading sports and entertainment intermediary CAA; live entertainment company Cirque du Soleil; online beauty products provider ipsy; online education platform Lynda.com (sold to LinkedIn); digital apartment rental platform RentPath; music streaming service Spotify; motion picture, television, and digital content studio STX; and ride sharing platform Uber.
TPG was advised on the transaction by Cleary Gottlieb, Credit Suisse, Deloitte, and PJT Partners. UBS Investment Bank acted as lead financial advisor to Oak Hill Capital Partners, Wave, and GI Partners (“Sellers”). The Sellers also received financial advice from Wells Fargo Securities LLC and legal advice from Paul, Weiss, Rifkind, Wharton & Garrison LLP. Oak Hill Capital Partners received additional financial advice from Waller Capital Partners LLC, and GI Partners received additional legal advice from Kirkland & Ellis LLP.
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