Cable, Internet provider Knology being sold to Wow for $750.5 million
ENGLEWOOD, Colo. — Wow Internet, Cable & Phone is buying cable TV and Internet provider Knology Inc. for $750.5 million, partly to broaden its geographic reach.
A Knology spokesman insisted the deal is good news for the West Point, Ga.-based company’s Charleston-area subscribers.
“It gives us a lot more scale, and in this type of business scale is important because it helps us reduce our costs,” said Royce Ard, the spokesman. “If we’re able to reduce some of our programming costs, then that gets passed along to our customers.”
Wow, which is owned by private equity firm Avista Capital Partners, offers cable TV, Internet and telephone services in Michigan, Illinois, Ohio and Indiana. Knology serves the Southeastern U.S. as well as parts of Kansas and South Dakota. Its only South Carolina service territory is the Charleston area, where it offers cable TV, Internet and phone service packages. Its local corporate office is on Dorchester Road.
In February, Knology shares spiked after a report said the company was shopping itself to potential buyers.
Wow and Knology are a “natural fit,” Wow CEO Colleen Abdoulah said in a statement. She said that the two companies’ networks and infrastructure will aid growth.
The combined company would have more than 800,000 customers. Ard would not say how many customers Knology has in the Charleston region but said it will be “business as usual” for them.
“We don’t really see any changes coming in the near future,” he said. “It takes a while for these types of transactions to take place.”
Knology’s board unanimously approved the buyout, which must undergo regulatory and shareholder approval before it can close.
Ard said the company’s 80 to 100 employees in the Charleston area have nothing to fear and that the company’s growth plans are still on track. The company, which came to the region in 1998, serves parts of Charleston, North Charleston and, more recently, Mount Pleasant.
“We’re building over there just as we speak and we really don’t see any changes to that,” Ard said. “Those deals make sense whether it’s just Knology or Knology and Wow together.”
Wow is paying $19.75 per share, a 9 percent premium to Knology’s Tuesday closing price. Knology has about 38 million outstanding shares, according to FactSet, and about $752 million in debt at the end of 2011. The companies value the total deal, which Ard called a merger, at approximately $1.5 billion.
“We have always been the competitor,” Ard said, as opposed to a dominant player like Comcast. “It’s always sort of been in our DNA to pull the price of our cable, internet and phone services down in the market by providing competition. And Wow’s the same way.”
Knology’s shares on Wednesday closed up $1.35, or 7.48 percent, at $19.40.
The Associated Press and Brendan Kearney of The Post and Courier contributed to this report.