Time Warner Cable on Monday announced that they have struck a $3 billion cash deal to acquire Insight Communications. The buyout will give Time Warner an additional 750,000 customers throughout Indiana, Kentucky and Ohio.
The acquisition was led by private equity owners the Carylyl Group which took the company private in 2005 with other investors such as Crestview Partners and MidOcean Partners who purchased a significant stake in the company in April 2010.
The deal marks the largest buy for Time Warner Cable since they split from Time Warner.
Among the company’s new subscribers will be 679,000 video subscribers and 297 voice subscribers, along with 537,000 high-speed data subscribers.
Insight Communications was originally seeking $4 billion.
Time Warner Cable CEO and Chairman Glenn Britt says of the acquisition:
“We believe in our business and its long-term prospects and have long thought that Insight’s well-run, technologically advanced systems would fit well with our Midwest operations,” he went on to add, “With the deal announced today, we are able to acquire those systems at an attractive price that is consistent with both our disciplined approach to M&A and our capital allocation strategy.”
After onetime costs and capital expenditures the company says they will create annual cost efficiencies of nearly $100 million, with a bulk of the savings arriving within two years of closing the deal.
The merger announcement created a neutral feeling among Wall Street analysts with Credit Suisse’s Stefan Anninger revealing in a company report: “Our initial view is that the deal is neutral to modestly positive – not cheap, but not terribly expensive either.”
Time Warner boasts near 12 million subscribers and is the second largest cable services provider in the United States, second only to Comcast.