Time Warner Cable to buy Insight Communications from Carlyle for $3 bln

Time Warner Cable, the second-largest cable-television operator in the US, yesterday agreed to buy Insight Communications Co from private equity firm Carlyle Group, for $3 billion in cash, to expand into the Midwest region of the country.

Insight is the ninth largest cable operator in the US with approximately 759,400 customers in the three Midwest states of Kentucky, Indiana and Ohio. The New York-based company offers bundled, state-of-the-art video, high-speed Internet and voice telephony services to residential and business customers and delivers cn|2, a new kind of news and information network, to all of its Kentucky and Indiana customers.

The acquisition, which is Time Warner Cable's biggest since its 2009 spin-off from Time Warner Inc, would add 700,000 TV subscribers and 540,000 data subscribers.

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 2005, and Crestview and MidOcean acquired a significant stake in the company in last year.

Announcing the deal, Manhattan-based Time Warner Cable said it expects to save $100 million annually in programming expenses and other cost reductions, with the bulk of savings coming within two years of closing the deal.

"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," said Irene Esteves, CFO of Time Warner Cable. "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."

With more than 14 million customers, Time Warner Cable offers data, video, and voice services to businesses of all sizes, cell tower backhaul services to wireless carriers and, through its NaviSite subsidiary, enterprise-class hosting, managed application, messaging and cloud services.