Cable One to Acquire Hargray Communications
Cable One (NYSE: CABO) has entered a definitive agreement to acquire approximately 85% of Hargray Acquisition Holdings, valuing the transaction at $2.2 billion. Cable One has been a minority investor since October 2020. This acquisition aims to enhance Cable One's presence in the Southeastern U.S. and leverage Hargray’s expertise in fiber expansion. Hargray generated roughly $128 million in Adjusted EBITDA for the year ending December 2020, with anticipated annual synergies of $45 million post-acquisition. The deal is expected to close in Q2 2021, subject to regulatory approvals.
- Expansion into Southeastern U.S. markets, enhancing growth potential.
- Expected annual synergies of $45 million within three years post-acquisition.
- Hargray has a strong financial base with $128 million in Adjusted EBITDA for 2020.
- Hargray reported a net loss of approximately $28 million for the 4Q LQA.
- The acquisition may lead to financial strain if synergies are not realized as planned.
Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”) today announced it has entered into a definitive agreement to acquire the equity interests in Hargray Acquisition Holdings, LLC (“Hargray”) that it does not already own. The equity interests to be acquired by Cable One represent approximately
Hargray is a leading facilities-based regional communications provider serving residential and business customers in 14 markets across Alabama, Florida, Georgia, and South Carolina. Hargray offers gigabit-capable services to approximately
“We look forward to further partnering with Hargray to extend our presence in the Southeast through Hargray’s fast-growing markets, like-minded strategy, and commitment to providing fast and reliable internet service to rural markets,” said Julie Laulis, Cable One President and CEO. “This transaction will also serve as a potential platform for future organic and inorganic growth in the region as we look to continue to expand our footprint.”
Michael Gottdenker, Hargray Chairman and CEO, said, “Cable One and Hargray have remarkably similar cultures, starting with each company’s focus on delighting its customers. Having led Hargray for nearly 14 years, and having gotten to know Cable One well over the past few years, I am excited about this transaction and am confident that our colleagues, customers, and communities will continue to thrive under Cable One’s ownership.”
Financial Information
Hargray generated approximately
The purchase price represents multiples of Hargray’s 4Q LQA Adjusted EBITDA of:
- 17.2x before taking into account estimated run-rate synergies; and
-
12.7x after assuming the immediate realization in full of the
$45 million in estimated run-rate synergies that Cable One expects to realize within three years of closing the transaction.
Hargray’s 4Q LQA net loss was approximately
Transaction Details
Cable One intends to finance the transaction with a combination of existing cash resources, revolving credit facility capacity, and proceeds from new indebtedness and/or equity capital. Cable One has received
The transaction is subject to certain regulatory approvals and other customary closing conditions and is expected to be completed during the second quarter of 2021.
Credit Suisse acted as lead financial advisor to Cable One, and J.P. Morgan also acted as financial advisor to Cable One. Cravath, Swaine & Moore LLP acted as legal advisor to Cable One on this transaction.
Additional Information
Cable One anticipates providing additional information with respect to the transaction during the Company’s fourth quarter and full year 2020 earnings call on Thursday, February 25, 2021 at 5 p.m. Eastern Time.
About Hargray Communications
Founded in 1947, Hargray is a regional telecommunications company providing advanced Internet, television, and telephone communications services in a growing set of markets in South Carolina, Georgia, Alabama and Florida. Hargray is committed to delivering the most advanced technology and the best service for its customers and is active in the communities it serves. It supports a wide range of local charities, organizations, projects and events, including through the company’s Caring Coins Foundation which raises money from customer bills for community organizations.
About Cable One
Cable One, Inc. (NYSE: CABO) is a leading broadband communications provider serving more than 950,000 residential and business customers in 21 states through its Sparklight® and Clearwave® brands. Sparklight provides consumers with a wide array of connectivity and entertainment services, including high-speed internet and advanced Wi-Fi solutions, cable television and phone service. Sparklight Business and Clearwave provide scalable and cost-effective products for businesses ranging in size from small to mid-market, in addition to enterprise, wholesale and carrier customers.
USE OF NON-GAAP FINANCIAL MEASURES
This press release includes certain measures that are not defined by generally accepted accounting principles in the United States (“GAAP”). Adjusted EBITDA is a non-GAAP financial measure and should be considered in addition to, not as superior to, or as a substitute for, net income (loss) reported in accordance with GAAP. Adjusted EBITDA is reconciled to net loss below.
“Adjusted EBITDA” for purposes of this press release is defined as net loss plus interest expense, depreciation and amortization, equity-based compensation, severance expense, acquisition-related costs, loss on asset sales and disposals, system conversion costs, loss on extinguishment of debt, management compensation expense, and other income. As such, it eliminates the significant non-cash depreciation and amor
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