Consolidated Communications is taking its broadband business private, announcing Monday it has agreed to be acquired by Searchlight Capital Partners and British Columbia Investment Management Corporation (BCI).
The private equity firms are purchasing Consolidated for approximately $3.1 billion, which includes the assumption of the company’s debt. Searchlight already owned about 34% of Consolidated’s shares, but now it and BCI will acquire the remaining common stock for $4.70 per share.
Searchlight and BCI first proposed to acquire Consolidated in April. The operator proceeded to establish a special committee of independent directors to review and consider the deal.
Robert J. Currey, chairman of Consolidated Communication’s board and special committee chair, noted in a statement the transaction “is the best path forward” for the company and its shareholders.
“We also considered capital structure alternatives, analyzing the potential availability, cost and feasibility of injecting additional capital into the business,” he said.
The acquisition comes not long after Consolidated entered an agreement to sell off its Washington state assets to Palisade Infrastructure for $73 million.
At the time, CEO Bob Udell said the pending divestment resulted from “the ongoing review of our market portfolio and support[s] our commitment to focus fiber expansion in our core markets.”
Currey added the Searchlight/BCI acquisition takes into account the “growth opportunities” of Consolidated’s fiber build as well as “potential risks” like “impacts from liquidity and leverage limitations within which the Company must operate, the dynamic competitive pressures of a sector-wide fiber conversion and the imperative to continue our fiber build-out.”
Consolidated in Q2 reached nearly 1.12 million total fiber passings, covering 43% of its overall footprint with fiber. By the end of 2023, it’s said it plans to run fiber to 225,000 passings.
It’s unclear how the PE acquisition will impact Consolidated’s year-end passings target. But Udell suggested the operator’s multi-year fiber deployment may take longer to complete.
“While we are pleased with how we have managed the business despite these headwinds, several factors recently necessitated that we delay our estimated fiber build completion beyond 2026,” he said in a statement.
The company previously had plans to cover 70% of its territory with fiber by mid-2026.
“As we navigate this environment, we will have increased flexibility as a private company and Searchlight will continue to be an outstanding partner as we advance our transformation to a leading fiber-first provider,” Udell added.