Private equity firm snaps up Astound Broadband for $8.1B

Stonepeak Infrastructure Partners has struck an $8.1 billion deal to acquire Astound Broadband – a service provider conglomerate that runs RCN, Grande Communications, Wave Broadband and enTouch Systems – from TPG Capital and Patriot Media Management.

The $8.1 billion price tag includes $4.5 billion of debt, according to The Wall Street Journal .

RCN, Grande, Wave and enTouch collectively serve more than 1 million residential and business customers in parts of Chicago; eastern Pennsylvania; Massachusetts; New York City; northern California; Oregon; Texas; Washington, D.C.; and Washington state. Combined, those operators have deployed more than 23,000 miles of fiber across those territories, the companies said.

The deal, announced Sunday (November 1), arrives two months after Reuters reported that TPG Capital was putting Astound up for sale and seeking about $8 billion. TPG amassed what became Astound through a string of acquisitions – Wave Broadband for $2.36 billion in 2017, and RCN and Grande for $2.25 billion in 2016. In February 2020, TPG scooped up EnTouch Systems, an operator that serves about 22,000 customers in the Houston area.

Stonepeak and TPG are billing the deal as the largest private equity acquisitions in the US so far in 2020, and the largest cable deal in the past five years. They expect to close the transaction in the second quarter of 2021.

Stonepeak is teaming on the deal with Patriot Media, a company that currently manages Astound and is led by two cable industry vets – chairman Steve Simmons and CEO Jim Holanda. Under its partnership with Stonepeak, Patriot Media will continue to run the service providers that make up Astound.

Infrastructure investment specialist

Stonepeak is a PE firm specializing in infrastructure investing. Examples of companies in Stonepeak's investment portfolio include Cologix, which operates 24 data centers in eight markets across the US and Canada, ExeNet Systems, a provider of distributed networks focused on outdoor and indoor connectivity, and Vertical Bridge, a company that owns and manages wireless communication infrastructure in the US.

"We've had a thesis around broadband infrastructure for some time," Brian McMullen, partner at Stonepeak, told the WSJ.

The Astound deal involves wheeling and dealing among private equity firms, but it also comes about amid a general rise in M&A activity focused on North American cable.

Cable One has been particularly active in picking up small and midsized operators, but nothing of the size that rivals Astound. Altice USA is trying to acquire Montreal-based Cogeco via a transaction structure that would see Altice USA retain Cogeco's US assets (Atlantic Broadband) and sell Cogeco's Canadian operations to Toronto-based Rogers Communications. However, Cogeco's boards of directors and a family-owned company with majority rights in Cogeco have shot down Altice USA's overtures at every turn.

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— Jeff Baumgartner, Senior Editor, Light Reading