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TPG Capital Catches Wave Broadband

Score another big deal for the US cable consolidation movement. TPG Capital announced Monday that it will buy Wave Broadband for $2.36 billion, thereby creating a major new top-ten MSO in the US.

If it goes through, the deal, which was first reported as a prospect by Reuters last week, will combine the assets of Wave Broadband with RCN Corp. and Grande Communications . The combined company will stand to have 925,000 customers and 1.7 million revenue generating units (RGUs) over a 2.7-million-home footprint, enabling it to leapfrog over both Cable One Inc. and WideOpenWest Holdings LLC (WOW) to become the sixth-largest cable operator in the nation.

Wave Broadband, a Seattle-based cable operator and overbuilder, boasts about 138,000 video customers in sections of Washington State and Oregon, including Seattle and Portland, as well as northern California. Concentrating on broadband, it has recently focused on scooping up fiber and data companies to boost its high-speed presence, including Seattle-based CascadeLink. The company's owners, Oak Hill Capital Partners and GI Partners, hired investment bankers last month to find a buyer.

For its part, TPG has been on a takeover tear in the cable space. Last August the company snapped up Grande and RCN, two other cable operators and overbuilders, for $2.25 billion. So it has now shelled out more than $4.6 billion in less than a year for the right to start playing with the big boys of US cable. (See TPG Splashes $2.25B on RCN & Grande and TPG's Slice of the Cable Market Still Small.)

With the Wave acquisition, the combined company will operate in a number of major markets throughout the country, including New York, Boston, Washington, D.C., Chicago, Austin, Dallas, San Antonio, San Francisco, Seattle and Portland. The company said it plans to keep growing its residential customer base while also speeding up the expansion of its commercial and enterprise business units. Executives expect to close the deal in the fourth quarter.

In a year that has already seen Cable One buy NewWave Communications, WOW issue an initial public offering and Liberty Interactive snatch up General Communication Inc. (GCI) (Nasdaq: GNCMA), the big question now is who will go next. Time to place your bets. (See Cable One Bids $735M for NewWave, WOW Makes Its Case for IPO and Malone Cable Empire Expands to Alaska.)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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