TPG Capital, the global private equity platform of alternative asset firm TPG, has announced  that it is backing RCN Telecom Services, LLC, a nationwide broadband service provider controlled by TPG, to combine with Wave Broadband for US$2.365 billion.

Currently owned by Oak Hill Capital Partners, Wave management, and GI Partners, Wave is a regional broadband fiber company offering a full suite of high-speed data, video, and voice services to residential and business customers. RCN and Wave will combine to create the nation’s sixth largest cable operator, with a diversified presence across seven of the top ten cities in the U.S.

The transaction is expected to close in the second half of 2017, and is subject to customary closing conditions, including regulatory approvals.

Wave is a regional incumbent cable and broadband services provider reaching 673,000 homes and more than 1,800 unique commercial clients in Washington, Oregon, and California. The company has nearly 8,000 miles of owned fiber supporting its market-leading enterprise fiber business. Wave was founded in 2002 by Steve Weed, who will join RCN as a Director upon the close of the transaction. Wave will continue to operate as a branded entity, headquartered in Kirkland, Washington.

In August 2016, TPG entered into definitive agreements to acquire RCN as well as Grande Communications Networks LLC through separate transactions. The combination created a regional market leader in next-generation, high-speed data services for residential and business customers with a presence spanning the East Coast, Chicago, and Texas. The combination with Wave expands RCN’s footprint to the West Coast.

TPG’s investments in Wave and RCN reflect its strategy of partnering with innovative companies that are at the forefront of evolving industries. 

TPG was advised on the transaction by Cleary Gottlieb, Credit Suisse, Deloitte, and PJT Partners. UBS Investment Bank acted as lead financial advisor to Oak Hill Capital Partners, Wave, and GI Partners. The sellers also received financial advice from Wells Fargo Securities LLC and legal advice from Paul, Weiss, Rifkind, Wharton & Garrison LLP. Oak Hill Capital Partners received additional financial advice from Waller Capital Partners LLC, and GI Partners received additional legal advice from Kirkland & Ellis LLP.

Steve Weed, Founder and CEO of Wave, said:

“Since our founding, we have been committed to providing customers with the highest quality, most reliable, and fastest data services available. Over the last several years we have accelerated our growth substantially by expanding from our heritage of residential broadband services into enterprise-grade fiber. Oak Hill and GI have been outstanding partners, and we are excited that our new partners, TPG and RCN, recognize the value of what we have created. We are eager to enter our next era of growth alongside them.”

David Trujillo, Partner at TPG Capital, said:

“Demand for high-speed broadband services is growing rapidly as digital content continues to proliferate,” said “High-quality, reliable communications infrastructure is increasingly important, and the acquisition of Wave is a transformative addition that will allow RCN to provide broadband-related services in new and growing markets. We look forward to working with RCN and Wave management to serve even more residential and business customers across the country.”