U.S. cable operator WOW! has signed two separate deals to sell its Cleveland and Columbus, Ohio, service areas and its Chicago, Evansville, Indiana, and Anne Arundel, Maryland, service areas.
Atlantic Broadband, a fellow U.S. cable operator and subsidiary of Cogeco Communications, has agreed to acquire the Cleveland and Columbus markets for $1.125 billion. Astound Broadband, a telecommunications holding company, has agreed to acquire WOW!’s Chicago, Evansville and Anne Arundel service areas for $661 million.
Total transaction gross proceeds will be approximately $1.786 billion. The transactions are expected to close in the second half of the year and, as part of the deals, WOW! has entered into Transition Services Agreements with both parties.
WOW! is getting rid of some of its most significant Midwest markets through the agreement but it will still retain Detroit, Michigan along with several markets in Alabama, Florida, Georgia, South Carolina and Tennessee.
"We are pleased to reach these two agreements as WOW! takes a significant step toward accelerating our broadband-first growth strategy at a pivotal time in our industry," said WOW! CEO Teresa Elder in a statement. "The substantial proceeds from these transactions reflect the attractiveness of our assets and the clear opportunity to expand our position as a trusted provider of reliable, accessible and fast broadband solutions. The divestiture of these markets will enable us to reduce our debt as we continue to execute our broadband-first strategy, including pursuing our edge-out and greenfield strategies and expanding our commercial services."
WOW! anticipates its leverage ratio will be cut in half—down to 2.5x from 5.0x as of March—thanks to lower net debt.
As part of this transaction, WOW! said it anticipates some employees from each of the sold markets will remain with WOW!, some may be integrated into Atlantic Broadband and Astound Broadband, and others may leave the business all together.
WOW ended the first quarter of 2021 with approximately 291,000 video subscribers, down from about 366,000 one year ago. On a pro forma basis as of March 31, 2021, the company said it would have had approximately 532,000 total subscribers.