TW Cable to buy systems from NewWave for $260M
Tuesday, June 14, 2011
NEW YORK (AP) — Time Warner Cable Inc., the nation's second largest cable TV company, said Monday that it has agreed to acquire cable systems serving about 70,000 video subscribers from NewWave Communications for $260 million in cash.
The deal also includes 42,000 high-speed data subscribers and 26,000 phone subscribers. The customers are in Kentucky and western Tennessee.
The purchase is subject to regulatory approval and is expected to close in the final three months of the year.
Time Warner Cable Chief Operating Officer Rob Marcus said in a statement the acquisition allows the company to expand its footprint at a favorable price.
Nomura analyst Michael McCormack said the deal values each NewWave video subscriber at $3,700, compared to the implied value of $3,500 per video subscriber at Time Warner Cable, based on Time Warner Cable's share price.
That was a positive sign that the company wasn't overpaying for assets, he said in a research note. He also said that Time Warner Cable has cable systems that are adjacent to the ones it acquired, raising hopes that there will be cost synergies from running the combined systems.
Time Warner Cable shares rose 29 cents to $74.10 in afternoon trading Monday.
NewWave is based in Sikeston, Mo., and serves another 80,000 customers in Illinois, Indiana, Missouri and Arkansas.
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