Cable One, Inc. (NYSE: CABO) has agreed to buy fellow cable multiple systems operator (MSO) Fidelity Communications Co. for $525.9 million in cash, subject to customary post-closing adjustments. Cable One expects to complete the deal for privately held Fidelity during the fourth quarter of this year.
Headquartered in Sullivan, MO, Fidelity provides residential and business services in Arkansas, Illinois, Louisiana, Missouri, Oklahoma, and Texas. Its network, which Cable One describes as having “upgraded systems and a high-capacity plant,” includes more than 5,100 network plant miles and more than 1,600 fiber route miles. The network passes approximately 190,000 homes, with approximately 114,000 residential primary service units (PSUs) and 20,000 business PSUs. More than half of Fidelity’s revenues come from residential high-speed data and business services. Those activities generated an estimated $45 million in last quarter annualized (LQA) adjusted EBITDA for the fourth quarter of 2018. Cable ONE says it expects to realize $15 million in estimated annual run-rate cost synergies within three years of closing the transaction. The company also expects the deal to provide estimated tax benefits of approximately $87 million on a present value basis.
“We are thrilled to welcome Fidelity associates and customers to the Cable ONE family,” said Julie Laulis, president and CEO of Cable ONE. “Fidelity is a fantastic geographical, cultural, and business fit. Its operating philosophy and customer-centric focus are similar to our own. That, coupled with future growth opportunities within or near our existing footprint, make this an exciting acquisition.”
Cable One plans to fund the purchase via a combination of cash on hand, revolving credit facility capacity, and new debt. The agreement comes after Cable One agreed late last year to buy Clearwave Communications to expand its business services footprint (see "Cable ONE targets business customers with Clearwave Communications acquisition").
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