This article about a deal under which a private-equity investment firm would acquire RCN, a Herndon-based broadband company, referred to RCN chief executive Peter Aquino as Aquinas in some instances.
Va. broadband provider RCN accepts Boston equity firm's acquisition offer
Saturday, March 6, 2010
Herndon-based RCN announced Friday that it has agreed to be acquired by a private-equity investment firm in a transaction valued at $1.2 billion.
Under the terms of the deal, Boston-based ABRY Partners would pay $530 million and assume $730 million in debt in a move that would take the local broadband provider to a privately held status.
"We thought it was a good opportunity to give value to shareholders," said RCN chief executive Peter Aquino.
ABRY said it would pay $15 in cash for each share of RCN, a figure that represents a 22 percent premium over its closing price Thursday.
The proposed deal would require shareholder and regulator approval; if it gets those blessings, the deal would probably be completed in the latter half of this year.
RCN's cable television and Internet service network ranges from Richmond to Portland, Maine, and includes coverage in the metropolitan areas of Boston, Chicago, Washington, Philadelphia and New York.
Frank G. Louthan IV, an analyst who follows the telecommunications industry for Raymond James & Associates, said that ABRY's investment represented a "reasonable price" for RCN.
"ABRY has invested in the cable space and telecom for years and years. It's a natural fit for them," he said.
Louthan saw an advantage for RCN in going private: It's possible that the Boston investment firm will be able to spend the sort of money needed to expand RCN's telecom business. "It would likely take investment that would lower cash flow in the short term, which investors would not like," he said.
Aquinas said there has been some consolidation among some of the smaller players in his industry, a move that makes sense as larger competitors -- namely, Time Warner, Comcast and Verizon -- are able to negotiate lower prices from television networks because of their bigger subscriber base. Furthermore, the "big three" have deeper pockets for marketing, he said.
RCN will shop itself among other potential buyers for 40 days, to ensure that the company's shareholders get the best value, although Aquinas said that the ABRY deal was "a little out of the blue" and not one of many previous offers.
Aquinas and Chief Financial Officer Michael T. Sicoli said the company's headquarters are expected to remain in Herndon. Sicoli predicted there would be "really no change" for most of the company's 1,500 employees.
News of the agreement sent RCN share prices soaring. The stock closed up 23.6 percent, or $2.89, at $15.15 on Friday.