John Malone’s Liberty Global has expanded its footprint in Puerto Rico by teaming up with Searchlight Capital Partners to buy Puerto Rico Cable Acquisition Co., which does business as Choice Cable TV, for about $272.5 million.
Choice TV, which is the second largest cable and broadband provider in Puerto Rico, will be folded into Liberty Cablevision with Liberty Global owning a 60 percent stake and Searchlight owning the remaining 40 percent. The combined company will be the largest cable operator on the island.
“The Choice transaction will build upon our 2012 acquisition of OneLink and will complete cable consolidation on the island of Puerto Rico,” said Liberty Global CEO Mike Fries. “Going forward, our market-leading bundles and commitment to network investment and innovation will meaningfully enhance the products and services available to Choice customers. Upon completion, our network will reach over 80 percent of Puerto Rican homes, and the combined business will serve more than 700,000 RGUs and generate over $380 million of annual revenue.
“Additionally, this will be the first new asset in our anticipated tracking stock for our businesses in Latin America and the Caribbean.”
The deal is expected to close in the first half of next year once it clears customary closing condition and regulatory approvals. Liberty Global expects to attribute its 60 percent interest in the combined company to its new tracking share group, the Liberty Latin America and Caribbean Group, or “LiLAC Group,” once the tracking share proposal is approved by its shareholders and completed.
As of August, Choice’s network passed approximately 345,000 homes and served approximately 154,000 RGUs.
“We are excited about the opportunity to bring next-generation video capability and enhanced broadband services to Choice’s customers,” said Eric Zinterhofer, co-founder of Searchlight. “Furthermore, 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 companies said they would fund the purchase through incremental debt borrowings at the combined Puerto Rico businesses. LionTree Advisors acted as financial advisor in the transaction.
On a related note, Searchlight announced earlier this month that it was making a $75 million investment in GCI, which is Alaska’s largest telecommunications company. Zinterhofer will join GCI’s board of directors.