Mega Broadband, Cable One announce strategic partnership

Sept. 29, 2020
In the transaction, Cable One will purchase a 45% minority stake in MBI from affiliates of GTCR LLC, a leading private equity firm, for approximately $574.1 million in cash.

Mega Broadband Investments Holdings LLC (MBI) and Cable One, Inc. announced on Sept. 28 that they have entered into a definitive agreement providing for a strategic investment by Cable One in MBI.

In the transaction, Cable One will purchase a 45% minority stake in MBI from affiliates of GTCR LLC, a leading private equity firm, for approximately $574.1 million in cash, subject to adjustment for certain new debt incurrences and transaction expenses. In addition to the minority stake it will acquire, Cable One will have the right to purchase the remaining interests in MBI at a predetermined multiple of earnings beginning in 2023.

MBI was formed through a series of acquisitions, including Vyve Broadband, Northland Communications and the broadband assets of Eagle Communications. Unified today under the Vyve Broadband brand, the company provides high-speed data, television and voice services to residential and business customers in rural markets across Alabama, Arkansas, California, Colorado, Georgia, Idaho, Kansas, Louisiana, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Washington, and Wyoming. Vyve Broadband’s network passes approximately 630,000 homes.

“This strategic investment in MBI reflects a continuation of our commitment to provide rural America with reliable high-speed internet service,” said Julie Laulis, President and CEO of Cable One. “MBI has developed an excellent network in geographies complementary to our existing footprint and we are excited to share in its future growth. MBI’s operating model and local-first focus mirrors our own and we are pleased to partner with MBI.”

MBI has upgraded systems and a high-capacity plant with more than 15,800 network plant miles, including over 4,100 fiber route miles, capable of delivering Gigabit speeds across its footprint.

“This transaction represents the next step of MBI’s ongoing transformation, and I am excited to have the backing of Cable One alongside GTCR,” said Phil Spencer, CEO of MBI. “Over the last few years our team has invested significant capital to upgrade our networks, roll out Gigabit internet service, and enhance business services across our footprint. Under our new partnership, we plan to continue making significant investments in our network, our communities, and our employees.”

“We are excited by Cable One’s investment in MBI. We view Cable One as a leader in the industry with its broadband-first approach, which we have sought to emulate at MBI,” said Stephen Jeschke, Managing Director at GTCR. “We look forward to our partnership and our collective continued investment to advance the broadband networks in the rural communities MBI serves.”

The transaction is expected to be completed during the fourth quarter of 2020. Cable One expects to fund the transaction through cash on hand. Kirkland & Ellis LLP acted as legal advisor and Credit Suisse acted as financial advisor to MBI on this transaction. Locke Lord LLP acted as legal advisor and Truist Securities, Inc. acted as financial advisor to Cable One on this transaction.

Cable One anticipates providing additional information regarding the transaction during its Third Quarter 2020 earnings call in November 2020.

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