* Suddenlink is 7th largest cable operator in United States
* Equity infusion plus incremental debt total about $2.5 bln
* Cash, debt deal pegs Suddenlink enterprise value at $6.6
By Euan Rocha
TORONTO, July 19 Private equity firm BC Partners
and one of Canada's top pension funds are joining forces with
the management of Suddenlink Communications to buy out the U.S.
cable operator in a cash and debt deal worth roughly $2.5
BC Partners and the Canadian Pension Plan
Investment Board said late on Wednesday they are teaming up with
U.S. cable industry veteran Jerry Kent to buy Suddenlink from
Goldman Sachs Capital Partners, Quadrangle and Oaktree Capital
The Suddenlink deal is the latest in a string of deals in
the cable sector both within and outside the United States.
The industry has seen some of the largest buyouts of the
last two years, as both sector incumbents and private equity
firms have swooped in to acquire cable companies that offer the
promise of revenue growth and steady cash flows.
In August last year, Time Warner Cable bought cable
operator, Insight Communications from Carlyle Group for
$3 billion to grow its reach in the U.S. Midwest.
Earlier on Wednesday, Cogeco Cable Inc, a Canadian
company that serves mostly rural customers in the provinces of
Ontario and Quebec, said it would pay $1.36 billion to buy U.S.
cable operator Atlantic Broadband, in a move aimed at gaining a
foothold in the larger U.S. market.
The Suddenlink deal includes a $1.99 billion equity portion,
along with incremental debt of $500 million. Including existing
debt, the deal pegs Suddenlink's enterprise value at $6.6
Suddenlink offers cable, Internet and telephone services to
more than 1.4 million residential and commercial customers in
Texas, West Virginia, North Carolina, Oklahoma, Arkansas and
Louisiana. It is the seventh-largest U.S. cable operator with
annual revenues of around $2 billion and 6,000 employees.
Kent, who will continue in his role as Suddenlink's chief
executive, said the deal will allow his team to invest further
in new technology and infrastructure.
The executive, who has worked in the industry for close to
three decades, co-founded cable operator Charter Communications
Inc and built it into one of the top 10 U.S. cable
"Cable is an industry we know well in both Europe and the
United States" added BC Partners managing partner Raymond
Svider, adding that the cable sector "epitomizes the defensive
growth characteristics" that the firm typically seeks in an
The deal comes almost exactly a year after the private
equity firm agreed to acquire Swedish cable company Com Hem for
$2.6 billion. BC Partners was also involved in the creation of
German cable operator Unitymedia, which it later sold to
U.S.-listed cable giant Liberty Global for $3 billion
Earlier in July, Reuters reported Suddenlink's part owners -
Quadrangle and Goldman Sachs Capital Partners - are preparing to
sell Norwegian cable operator Get, either later this year or
early next year.
Suddenlink, which has recently undergone an infrastructure
upgrade, said it is well positioned to benefit from continued
strength in television viewership and industry trends like the
growth in high-speed Internet adoption.
The company has consistently reported solid revenue growth
over the last five years, boasting compounded annual revenue
growth of 7.4 percent since 2007.
"This represents a unique opportunity to acquire a leading
cable operator that has consistently generated industry-leading
results," said André Bourbonnais, who heads private investments
Toronto-based CPPIB manages funds for the Canadian Pension
Plan. It invests in a wide range of assets and instruments. As
of March 31, the fund was worth C$161.6 billion ($159.9 billion)
of which C$26.3 billion was invested in private equities.
CPPIB, along with its Canadian peers like Teachers' and
Caisse de depot et placement, have been among the world's most
active dealmakers in recent years, making major bets both in
Canada and overseas.
The companies said the Suddenlink deal is expected to close
in the fourth quarter of 2012, subject to regulatory approvals.