Fort Worth- and San Francisco-based private equity firm TPG Capital, which already owns San Marcos-based Grande Communications Network LLC and New Jersey-based RCN Telecom Services announced May 22 it plans to combine those assets with Kirkland, Washington-based Wave Broadband for $2.365 billion.
By merging all three, TPG’s assets will reach nearly a million residential and business customers on the East and West coasts and also in Chicago and Teas.
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 agreed to acquire RCN as well as Grande Communications Networks LLC 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. 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.