Charter Communications Inc., a member of Connecticut’s “Next Five” economic development initiative and the nation’s fourth-largest cable company, has agreed to acquire regional cable provider Optimum West from Cablevision Systems Corp. for $1.625 billion in cash.
Under the agreement, which is subject to regulatory approval, Charter would take on about 304,000 Optimum West cable customers in Colorado, Montana, Utah and Wyoming.
With customers in 25 states, Charter is in the process of constructing a new headquarters in downtown Stamford, at which point the company will relocate most corporate executives from its current headquarters in St. Louis.
The company said it would fund the deal through $1.5 billion of committed bank financing, liquidity from cash on hand and its revolving line of credit. Charter, whose stock is publicly traded on the Nasdaq, expects the deal to close in the third quarter of 2013.
Multiple cable providers, including Time Warner Cable Inc., reportedly presented Cablevision with offers for Optimum West. Cablevision bought the unit, which formally does business as Bresnan Broadband Holdings L.L.C., more than two years ago from Providence Equity Partners Inc. for slightly less than $1.4 billion.
“With this transaction, Charter will acquire some of the fastest growing cable assets in the United States,” said Tom Rutledge, Charter’s President and CEO, in a prepared statement.
Credit Suisse and Goldman Sachs acted as financial advisors to Charter, and have also provided debt financing commitments for the transaction, Charter said.
Citigroup and JPMorgan Chase acted as co-lead financial advisors to Cablevision. Bank of America Merrill Lynch and Guggenheim Securities also provided financial advice to Cablevision. Sullivan & Cromwell L.L.P. acted as legal counsel to Cablevision.
“We are proud of the value we created in the Optimum West properties,” said Cablevision President and CEO James L. Dolan in a prepared statement. “We made strategic investments in the cable system and significantly enhanced the network to provide our customers with more robust products and services.”
Cablevision, based in Bethpage, N.Y., is the country’s fifth-largest cable provider and has about 3 million customers in New York, New Jersey, Connecticut and parts of Pennsylvania.
In October, it was announced that Charter would establish a new headquarters in downtown Stamford as part of the “Next Five” program pioneered by Gov. Dannel P. Malloy.
As part of its agreement to participate in the “Next Five” program, Charter pledged to bring at least 200 jobs to Connecticut and said it would invest more than $10 million in the construction of a 70,000-square-foot office space at 400 Atlantic Ave.
In exchange, the Connecticut Department of Economic and Community Development (DECD) said it would provide a 10-year loan of $6.5 million at a two percent rate, with principal payments deferred for three years. The loan, or a portion of it, could be forgiven if certain job milestones are reached. The agreement with Charter also includes other incentives based on future job gains.
[Editor’s note: This article was updated to reflect additional information that became available with the formal announcement of the transaction by Charter Communications and Cablevision.]