WaveDivision Holdings LLC is exploring a sale that its private equity owners hope will value the regional U.S. provider of cable TV, internet and telephone service at more than $2 billion, including debt, according to people familiar with the matter.
The move comes amid a wave of dealmaking in the U.S. cable sector, as fierce price competition and significant capital expenditure requirements put pressure on what have traditionally been stable businesses with reliable cash flows.
Buyout firms Oak Hill Capital Management LLC and GI Partners, which together with Wave's management own the company, have hired investment bank UBS Group AG (UBSG.S) to run an auction for Wave, the people said this week.
Wave has 12-month earnings before interest, taxes, depreciation and amortization of around $200 million, the people added.
The sources asked not to be identified because the deliberations are confidential. Wave and UBS declined to comment. Oak Hill Capital and GI Partners did not immediately respond to requests for comment.
A sale of Wave would be the latest in a string of such deals in the sector. Earlier this week, U.S. cable mogul John Malone's Liberty Interactive Corp (QVCA.O) said it would acquire Alaska-based cable provider General Communication Inc (GNCMA.O) for $1.12 billion.
Last year, private equity firm TPG Global acquired regional broadband providers RCN Telecom Services LLC and Grande Communications Networks LLC for $2.25 billion from another buyout firm, ABRY Partners.
Headquartered in Kirkland, Washington, Wave has residential and commercial customers in the Seattle, Sacramento, San Francisco and Portland markets.
A portion of Wave's network, including in the San Francisco market, is considered an "overbuilder," meaning it competes with existing cable providers. This could present regulatory obstacles for another cable company seeking to acquire it.
Wave has also been heavily investing in its fiber network. The company said last fall it has 1,000 fiber construction projects underway.
Wave's fiber-rich network could enable it to generate more cash from its high-speed data services for homes and businesses, credit ratings agency Moody's Investors Service Inc said last August.
Oak Hill Capital, GI Partners and Wave's management, including Chief Executive Steve Weed, acquired the company in 2012 from Sandler Capital Management. The value of that deal was $950 million, according to Moody's.
(Reporting by Liana B. Baker in San Francisco; Editing by Meredith Mazzilli)