WOW Internet, Cable & Phone (WOW) today announced agreements in which it will sell systems in Ohio, Illinois, Indiana and Maryland. The divestitures have a total value of $1.786 billion.
The larger agreed to transaction is with Cogeco Communications’ subsidiary Atlantic Broadband, which agreed to acquire WOW’s broadband systems in Cleveland and Columbus Ohio. The purchase price of the systems is $1.125 billion.
The systems pass 688,000 homes and businesses. As of the end of March, the systems had about 196,000 Internet subscribers, 61,000 video customers and 35,000 telephony subscribers. Revenue for the 12 months ending on that date was $244 million. Pro forma adjusted EBITDA — including adjustments to reflect the expected cost structure of Atlantic Broadband and run-rate synergies – would have been $103 million.
Separately, WOW agreed to sell its Chicago, Evansville IN and Anne Arundel MD service areas to Astound Broadband, which does business as RCN, Grande Communications and Wave Broadband. The purchase price of those systems is $661 million.
The divestitures will enable WOW to reduce its leverage ratio from 5.0x at the end of March to 2.5x due to lower net debt, the company said. WOW said it has entered into transition services agreements with both Atlantic Broadband and Astound to ensure a smooth transition.
“We are pleased to reach these two agreements as WOW! takes a significant step toward accelerating our broadband-first growth strategy at a pivotal time in our industry,” WOW! CEO Teresa Elder said in a press release about the divestitures. “The substantial proceeds from these transactions reflect the attractiveness of our assets and the clear opportunity to expand our position as a trusted provider of reliable, accessible and fast broadband solutions. The divestiture of these markets will enable us to reduce our debt as we continue to execute our broadband-first strategy, including pursuing our Edge-out and greenfield strategies and expanding our commercial services.”
Altice USA and Rogers Communications made a move to acquire Cogeco and Atlantic Broadband last year. An offer in September and a subsequent revised and enhanced offer in October both were unsuccessful.