TPG to Buy RCN and Grande Communications for About $2.25 Billion

Private-equity firm TPG has agreed to buy cable-television providers RCN and Grande Communications for about $2.25 billion including debt, according to people familiar with the matter, in a bet that demand for new broadband services will fuel growth in the businesses.

Google Capital, Alphabet Inc.'s growth-equity investment fund, is taking a minority stake in the companies, which are currently owned by private-equity firm Abry Partners, some of the people said. The transactions could be announced Monday, they said.

RCN provides cable, phone and internet service on the East Coast and in Chicago, while Grande specializes in such services in Texas.

Demand for broadband internet service is rising and that has helped spark a wave of consolidation among companies seeking to better position themselves to capture the growth. Notable moves include Charter Communications Inc.'s agreement to buy Time Warner Cable Inc. and Bright House Networks, Altice NV's agreement to buy Suddenlink Communications and Cablevision Systems Corp., and phone giant AT&T Inc.'s purchase of satellite provider DirecTV.

Grande and RCN have shared management and other resources since Abry agreed to buy the two companies in 2009 and 2010, respectively. Their management, including Chief Executive Jim Holanda, will stay on, the people said.

TPG has done a number of deals in technology, media and telecommunications in recent years. It joined with Goldman Sachs Group Inc. in 2007 to buy Alltel Corp. and sold the telecom concern to Verizon Wireless two years later.

More recently, TPG has also been known for backing fast-growing startups such as car-hailing app Uber Technologies Inc., rental-room marketplace Airbnb Inc. and music streaming site Spotify AB. It was a bidder for Yahoo Inc., which Verizon Communications Inc. recently agreed to buy.

The firm has sought investments tied to changing consumer behavior involving online media and other digital content, investing in Ipsy, a cosmetics startup that relies on YouTube for marketing, and online-education company Lynda.com Inc., which LinkedIn Corp. bought.

Google Capital tends to focus on later-stage companies that are "harnessing long-term technology trends," according to its website—in contrast to Google Ventures, which places bets on early-stage startups.

Google Capital's investment might have relevance for Alphabet's broadband unit Google Fiber, which is rethinking its approach to building high-speed networks after its initial rollouts proved more costly and time-consuming than expected. RCN and Grande, like Google Fiber, are "overbuilders," meaning they've built networks over existing cable lines to compete against incumbent providers.

Jack Nicas contributed to this article.

(END) Dow Jones Newswires

August 14, 2016 22:35 ET (02:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.