RCN Targeted In $1.2 Billion Acquisition BidRCN Targeted In $1.2 Billion Acquisition Bid

RCN Corp. and private equity firm ABRY Partners announced Friday that ABRY plans to acquire the cable operator for $1.2 billion including the assumption of debt.

The deal calls for ARBY to provide $535 million in cash in addition to assuming responsibility for $730 million in debt. According to media reports, the debt figure was reported as of September 30.

RCN's primary service areas for its digital, video, voice and high-speed Internet services are in Washington D.C., Philadelphia, Lehigh Valley, New York City, Boston and Chicago. Its RCN Metro Optical Networks business unit delivers fiber data transport services to large commercial customers including large enterprises and carriers. The company is based in Herndon, Virginia, in suburban Washington.

In the announcement Friday, ABRY Partners, which specializes in media and communications investments, noted that it has completed more than $21 billion in investments in more than two decades.

In a signal that additional suitors and investors could be attracted to bid for RCN, ABRY and RCN said "RCN may solicit proposals from third parties for 40 days through April 14." The companies added that there can be no assurances that there will be "an alternate transaction."

The companies said financing for the deal is committed and will be provided by SunTrust Robinson Humphrey Inc., GE Capital, and Societe General.

After the offer was announced, RCN stock jumped $2.84 to $15.10 -- slightly higher than the $15 cash offer made by ABRY Partners, indicating other investors could appear.

RCN's planned fourth quarter 2009 results conference call has been cancelled because of the acquisition announcement, the companies said.

The Washington Post reported that RCN in 2004 was forced into bankruptcy protection and has struggled since then to make a profit. In its last financial report, for its third quarter, RCN said it lost $6 million on revenues of $192 million.