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Charter (CHTR) to Acquire Optimum West from Cablevision (CVC) in $1.63B Deal

February 7, 2013 4:24 PM EST Send to a Friend
Charter Communications, Inc. (NASDAQ: CHTR) ("Charter") and Cablevision Systems Corporation (NYSE: CVC) announced today that they have entered into a definitive agreement under which Charter Communications Operating, LLC will acquire Cablevision's Bresnan Broadband Holdings, LLC ("Optimum West") for $1.625 billion in cash. Optimum West manages cable operating systems in Colorado, Montana, Wyoming and Utah that pass more than 660,000 homes and serve 304,000 video subscribers and 366,000 customer relationships.

The $1.625 billion acquisition price represents a purchase price multiple of 8.9x Optimum West's third quarter 2012 annualized Adjusted EBITDA1 and a purchase price multiple of less than 8.0x Charter's estimate of Optimum West's first year Adjusted EBITDA under Charter. The transaction will be structured to deliver to Charter a full step-up in the tax basis of the acquired assets. Taking into account Charter's estimate of the present value of this tax asset, the effective purchase price multiple is less than 7.0x the estimated first year Adjusted EBITDA. "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.1 At closing, we expect to be at 5.0x leverage and continue to target 4.0x to 4.5x over time," noted Christopher Winfrey, Charter's CFO.

Charter will fund the acquisition of Optimum West with $1.5 billion of committed bank financing to Charter Communications Operating, LLC, and liquidity from cash on hand and its revolving credit facility.

The transaction is subject to customary closing conditions, including regulatory approval. We expect closing to occur in the third quarter of 2013.

Credit Suisse and Goldman Sachs acted as financial advisors to Charter, and have also provided debt financing commitments for the transaction.

Citi and J.P. Morgan acted as co-lead financial advisors to Cablevision. BofA Merrill Lynch and Guggenheim Securities also provided financial advice to Cablevision. Sullivan & Cromwell LLP acted as legal counsel to Cablevision.




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