WASHINGTON, May 3, 2024 – In what could be the launch of a consolidation wave, cable Internet Service Provider WideOpenWest (WOW!) said Friday that two private equity firms have made a surprise offer to take the ailing company private.
The $4.80 per share price represents a 32% premium over WOW’s closing price as of May 1, 2024 and [a] 44% premium to the company’s 60-day [volume-weighted average price],” DigitalBridge Managing Director Jonathan Friesel said in a May 2 letter to the WOW! board.
WideOpenWest said the bids came from DigitalBridge Investments and Crestview Partners to buy out the company at $4.80 a share, giving WOW! a valuation of about $400 million. Three years ago, WOW! was worth nearly $2 billion. Crestview, which already owns 38% of WOW!, is expected to contribute that stake to the equity portion of the deal.
In a statement, WOW! said its board of directors intends to establish a special committee of independent directors to evaluate the proposal, which WOW! described as an unsolicited non-binding preliminary proposal.
“We believe that our proposal represents a highly attractive value for the company’s shareholders relative to recent trading. The $4.80 per share price represents a 32% premium over WOW’s closing price as of May 1, 2024 and [a] 44% premium to the company’s 60-day [volume-weighted average price],” DigitalBridge Managing Director Jonathan Friesel said in a May 2 letter to the WOW! board.
WOW! shares closed Friday at $4.86 after regular trading.
With headquarters in Boca Raton, Fl., DigitalBridge is led by CEO Marc C. Ganzi, who founded and developed Global Tower Partners before selling the firm to American Tower Corp. in 2013 for $4.8 billion.
“DigitalBridge manages an $80 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders and has relevant experience to, and is very familiar with, WOW!,” Friesel’s letter added.
Friesel said the two suitors “will not move forward with our proposal unless it is recommended by the special committee and approved by the company’s board of directors.”
DigitalBridge and Crestview engaged LionTree Advisors to advise on the deal. LionTree CEO Aryeh B. Bourkoff is an established dealmaker known for his reach into the leadership echelons of the media and telecom sectors.
Crestview Partners’ leadership includes Vice Chairman and cable industry veteran Jeff Marcus. In 1998, Marcus sold his namesake Marcus Cable for $2.7 billion to Microsoft co-founder Paul Allen.
Marcus is also Chairman of WOW!’s nine-member Board of Directors. Crestview controls three other WOW! Board seats.
The proposed buyout of WOW! comes as investors continue to flee not just from WOW! but also Comcast Corp., Charter Communications and Cable One. In the past three-and-a-half years, Cable One’s stock has declined 84%, wiping out more than $10 billion in market value.
MoffettNathanson senior analyst Craig Moffett says Cable One’s market valuation had dropped so much it is trading below replacement value, making it a buyout target.
“We recently upgraded Cable One to ‘buy’ on the observation that [the stock] is trading below the replacement cost of its network. We noted at the time that investors pouring money into new fiber overbuilds (at much higher costs per connected home) and investors boycotting Cable One’s already-built network can’t both be right,” Moffett said in a client memo yesterday.
The WOW! buyout, if successful, would likely mark a disappointing finale for long-term WOW! shareholders. In 2021, WOW! sold cable systems mostly in the Midwest to Breezeline (then called Atlantic Broadband) and Astound Broadband for $1.2 billion, pushing the stock to almost $24 a share.
Last November after reporting third quarter earnings, WOW!’s stock lost 61% of its value the day after the company said it lost 4,400 broadband subscribers, with CEO Teresa Elder and CFO John Rego forecasting even worse numbers in the fourth quarter.
Based in Englewood, Colo., WOW! ended 2023 with 490,100 broadband subscribers, a decrease of 21,500 compared to Dec. 31, 2022 and down 13,300 compared to Sept. 30, 2023.
WOW! is transitioning away from the traditional cable TV business through a partnership formed a year ago with Google’s YouTube TV, an online linear TV service. WOW! ended 2023 with 90,800 video subscribers, down 32,400 from the year before.
WOW! is scheduled to report first quarter results on Tuesday, May 7, 2024, at 8:00 a.m. ET
