John Malone's Liberty Global plc (LBTYA) moved Wednesday to boost its reach in Puerto Rico, teaming with Searchlight Capital Partners LP to acquire Puerto Rico Cable Acquisition Co. in a deal valued at about $272.5 million.
Cable Acquisition does business as Choice Cable TV and ranks as the second-largest cable and broadband service provider on the island with exposure to more than 345,000 homes. Terms of the deal call for Choice to be combined with Liberty Cablevision of Puerto Rico LLC, with the combined business 60% owned by Liberty Global and Searchlight owning the remaining 40%.
The deal is valued at about 6.1 times Liberty's estimates for Choice's 2015 full year operating cash flow.
Liberty and Searchlight in 2012 teamed to acquire OneLink Communications Inc. for $585 million, establishing their presence on the island. Liberty CEO Mike Fries in a statement said that this latest purchase would build upon the OneLink deal and "will complete cable consolidation" in Puerto Rico.
"Upon completion, our network will reach over 80% of Puerto Rican homes, and the combined business will serve more than 700,000 RGUs [revenue generating units] and generate over $380 million of annual revenue," Fries said. The unit will also be the first new asset in Liberty's planned Latin America and Caribbean tracking stock.
Searchlight co-founder Eric Zinterhofer said "through the creation of an island-wide cable operator, there are significant opportunities to drive scale benefits and develop incremental residential and commercial business opportunities in Puerto Rico."
The buyers said they would fund the purchase price through incremental debt borrowings at the combined Puerto Rican businesses.
LionTree Advisors LLC acted as financial adviser to the buyers on the transaction.