TPG Capital to acquire RCN Telecom, Grande Communications

Private equity fund TPG Capital says it has reached agreements to acquire regional broadband services providers RCN Telecom Services LLC and Grande Communications Networks LLC. TPG will buy the companies in separate transactions from their common owner, ABRY Partners. RCN will cost $1.6 billion while Grande's price tag will be $650 million.

TPG plans to combine the two companies into what it believes will become a top ten U.S. cable company and regional service provider. The resulting combined company will provide high-speed data to both residential and business customers in several regions of the U.S. The deal is expected to close in the first quarter of 2017. TPG is partnering with Patriot Media, the management team that currently manages both RCN and Grande.

"The way that content is distributed and consumed has evolved significantly in ways that create an overwhelming demand for affordable, high-speed cable networks," says David Trujillo, partner at TPG. "There is an unprecedented amount of diverse, creative content being produced that is extremely bandwidth intensive, and consumers are craving access to that content through various internet-connected devices in the home all at once. This places never-before-seen demands on the underlying infrastructure.

Trujillo believes that high-speed data has become and will remain an essential connection for both consumers and businesses, and that RCN and Grande are an opportunity to invest in providing critical data communications infrastructure. Both companies have constructed high-speed communication networks that serve markets in Texas (Austin, Dallas, San Antonio), Massachusetts (Boston), Illinois (Chicago), Pennsylvania (Lehigh Valley), New York, and Washington, DC (see, for example, "Corning's FTTH platform to be deployed in Austin and San Antonio").

Patriot Media will continue to make significant investments in the network and technology to enable the new company to expand gigabit services. According to Jim Holanda, chief executive officer of Patriot Media, partnering with TPG will enable Patriot Media to build on TPG's experience of creating and growing networks to "build on a vision of delivering the best broadband and overall customer experience."

TGP's investment reflects the company's strategy of identifying and partnering with companies in thriving and evolving industries. The firm has previously partnered with CAA (sports and entertainment), Cirque du Soleil (live entertainment), Lynda.com (online education), Spotify (streaming services), STX (motion picture, TV and digital content), and Univision (Spanish broadcast TV). Within the Internet and digital media space, TGP has made investments in Airbnb, Ipsy, RentPath and Uber.

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