Seeking a foothold in the U.S. market, Cogeco Cable will acquire Atlantic Broadband for $1.36 billion.
Cogeco Cable has entered into a definitive agreement to acquire all of the shares of Atlantic Broadband ("Atlantic") an independent cable system operator based in Quincy, Massachusetts.
Atlantic serves about 252,000 basic video customers providing analog and digital video, as well as high speed Internet (HSI) and telephony services.
The transaction is valued at US$1.36 billion or 8.3x 2013E EBITDA, subject to certain closing adjustments. Atlantic is privately owned by ABRY Partners IV, L.P. ("ABRY") and Oak Hill Capital Partners, LP.
Atlantic Broadband Group, LLC was formed in 2003 and is the 14th largest cable television system operator in the United States. It operates certain cable systems in Pennsylvania, Florida, Maryland, Delaware and South Carolina.
"This acquisition marks an attractive entry point into the U.S. market for Cogeco Cable. There are sizable opportunities for growth including: increasing the penetration of the small and mid-sized business segment, and maximizing the bundling potential of services in the residential sector. We are very pleased to welcome all the employees of Atlantic Broadband into our organization," Louis Audet, President and CEO of Cogeco Cable, said in a statement.
Pro forma for the transaction, Cogeco Cable, will serve more than 1.1 million basic video customers across Canada and the United States.
Cogeco says it intends to finance the transaction through a combination of cash on hand, a draw-down on its existing revolving term facility of approximately US$550 million and US$660 million of borrowings under committed non-recourse debt financing at Atlantic Broadband. The pro-forma consolidated debt to EBITDA level of Cogeco Cable will be 3.1x at closing.
The transaction is subject to usual closing conditions, including Hart-Scott-Rodino approval (anti-trust), federal (FCC), state and local regulatory approvals and other customary conditions.
The company says it expects the transaction to close before the end of the calendar year.