Adelphia Acquisition: KKR and Providence Expanding Their Bid

Strategic Insights -

Time Warner and Comcast have been long considered front-runners to buy Adelphia, but the bankrupty US cable operator may face stiffer competition in the coming weeks. Kohlberg Kravis Roberts and Providence Equity Partners, two buy-out groups, are in advanced discussions with Cablevision Systems to join their bid for Adelphia, potentially offering a more substantial deal. The acquisition could be worth more than $17 billion, according to sources.

Key Takeaways:

  • KKR and Providence are expanding their consortium to bid for Adelphia, potentially offering a more substantial deal than Time Warner and Comcast.
  • A partnership with Cablevision would allow KKR and Providence to acquire more assets, potentially valuing the bid at over $17 billion.
  • Time Warner and Comcast have been considered frontrunners to buy Adelphia, but the competition from KKR and Providence may change the dynamics of the deal.
  • Analysts suggest that a Cablevision/Adelphia combination would not deliver the same cost-cutting and competition-reducing synergies as a Time Warner/Comcast acquisition.
  • The acquisition would still leave Adelphia as a smaller player compared to Comcast (21.5 million subscribers) and Time Warner (10.9 million subscribers).
  • Partnerships between equity groups and public companies are becoming increasingly common, with Providence recently joining forces with Sony and Comcast to acquire Metro-Goldwyn-Mayer.

Statistics:

  • Potential value of the Adelphia acquisition: over $17 billion.
  • Number of Adelphia subscribers: 8 million (potential combination with Cablevision).
  • Number of Comcast subscribers: 21.5 million.
  • Number of Time Warner subscribers: 10.9 million.
  • Number of markets where Time Warner and Comcast plan to cut costs and reduce competition: Los Angeles, Cleveland, Buffalo, Florida, and Pennsylvania.

Sources:

  • "M&A - KKR, Providence to bid for Adelphia with Cablevision", by James Politi and Aline van Duyn, Financial Times, no date mentioned.
  • "KKR and Providence May Bid for Adelphia With Cablevision", by James Politi and Aline van Duyn, New York Times, no date mentioned.