Optimum West operates in in Colorado, Montana, Wyoming and Utah, passing 660,000 homes and 366,000 customers. Cablevision first announced it was looking to sell the unit in November, having bought it for $1.4 billion in 2010.
Charter’s president and CEO, Tom Rutledge, described Optimum West as one of the fastest growing cable assets in the US.
"These former Bresnan properties operate in growing communities, and the network, employees and customer base have been well served for many years. In particular, over the past two years Cablevision, as Optimum West, has grown video, internet and telephone customers through the execution of a product and service strategy, which is the same as the one we recently implemented at Charter. Optimum West is an ideal fit for Charter and we anticipate an efficient integration process,” he said.
The $1.625 billion deal is 8.9 times Optimum West’s third quarter 2012 annualised adjusted EBITDA .Charter said it expects the effective purchase price multiple to be less than seven times estimated first year adjusted EBITDA with a full step-up in the tax basis of the acquired assets.
"Given the double digit growth profile of Optimum West, we view the implied purchase price multiple as attractive. In addition, the acquisition will increase our conversion rate of adjusted EBITDA to free cash flow. At closing, we expect to be at 5.0x leverage and continue to target 4.0x to 4.5x over time," said Christopher Winfrey, CFO at Charter.
Charter will fund the acquisition with $1.5 billion of committed bank financing and liquidity from cash and its revolving credit facility.
The transaction is expected to close in the third quarter of 2013, subject to regulatory approval.
Credit Suisse and Goldman Sachs acted as financial advisors to charter and provide debt financing commitments.
Cablevision was advised by Citigroup and JP Morgan, with Sullivan & Cromwell acting as legal counsel.
