MUMBAI: Time Warner Cable in the US will acquire Insight
Communications for $3 billion in cash.
Insight, serving approximately 537,000 high-speed data subscribers,679,000 video subscribers and 297,000 voice subscribers, has investedin infrastructure improvements. These system improvements include digital conversions and DOCSIS 3.0 deployment.
Time Warner Cable chairman and CEO Glenn Britt said, “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. 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. We look forward to serving these customers, welcoming Insight employees to the Time Warner Cable team and building on Insight’s successes.”
Insight Communications co-founder, vice chairman and CEO Michael Willner said, "For more than 25 years, Insight has provided our customers with unparalleled service and an unwavering commitment to excellence. We are extremely proud of the investment we’ve made to transform our cable systems into one of the leading telecommunications platforms in the nation. Given their industry-leading position and depth of resources, we expect that Time Warner Cable will continue
building on the advancements our tremendous employees have made while providing outstanding service to our customers. The communities we serve could not be in better hands than with Time Warner Cable which already operates in this region and is widely regarded as one of the most respected technology companies in the world."
Time Warner Cable believes that, after incurring onetime costs and capital expenditures, it will create annual cost efficiencies of approximately $100 million through programming expense savings and other cost reductions. The company expects to realise the bulk of the savings within two years of closing. Furthermore, with Insight’s digital conversion and DOCSIS 3.0 rollout behind it, Time Warner Cable expects Insight will have lower capital requirements of 10-12per cent of revenues upon completion of the acquisition.
Time Warner Cable CFO Irene Esteves said, “Taking into account Insight’s recent performance, $300 million in NOL value, the anticipated net cost synergies and lower capital intensity, this acquisition presents an attractive opportunity to enhance TWC shareholder value. With these benefits, the purchase price multiple is favorable to current TWC and peer average trading multiples. We will continue to return excess capital to shareholders consistent with our target leverage ratio of 3.25x, including the impact of this acquisition on our existing and expected leverage.”
Insight is currently owned by The Carlyle Group, Crestview Partners, MidOcean Partners, members of Insight management and others. Carlyle and Insight management took the company private in December 2005, and Crestview and MidOcean purchased a significant stake in the company in April 2010.
