UPDATE 2-Knology agrees to be taken private for $750 mln
* Including debt, deal valued at $1.5 bln
* Offer at $19.75/shr; 9 pct premium
* Knology shares rise 8 pct
April 18 (Reuters) - Regional cable operator Knology Inc will be bought by a unit of Avista Capital Partners for about $750 million plus an equal amount in debt, as the private equity firm adds cable assets in southeastern and midwestern United States.
The deal gives Avista's WOW Internet, Cable & Phone unit a broader presence in the Midwest markets and increases its subscribers to 800,000, which otherwise would have cost much higher.
"The cost (of establishing a network) is just too expensive and that's what makes Knology valuable," said Hamed Khorsand, a BWS Financial analyst.
Knology's fiber network lowers the cost of entry into the southeastern and midwestern markets for WOW, Khorsand said.
Last year, Time Warner Cable bought Insight Communications from the Carlyle Group for about $3 billion to expand its presence in the U.S. Midwest.
Founded in 2005, Avista Capital Partners invests primarily in growth-oriented healthcare, energy, and media companies. It has more than $4 billion in assets under management.
Cable companies are loved by private equity firms for their steady subscription revenue.
Knology traces its roots to Interstate and Valley Telephone Co and started providing telephone services in Georgia and Alabama in 1896. It went public in 2003.
As per the deal, WOW will acquire Knology for $19.75 per share, a premium of 9 percent to the stock's Tuesday close.
The offer is at a 25 percent premium to the stock's close on Feb. 27, before media reports said Knology could be exploring a sale of the company.
WOW offers cable and Internet services in Michigan, Illinois, Ohio and Indiana.
Credit Suisse, Morgan Stanley, RBC Capital Markets, SunTrust Robinson Humphrey and Bank of Tokyo-Mitsubishi UFJ have committed debt financing for the deal.
Knology shares rose 8 percent to $19.54 on Wednesday on the Nasdaq.