Time Warner Cable acquired NaviSite for $230 Million
Time Warner Cable Inc. (NYSE: TWC) and NaviSite, Inc. (NASDAQ: NAVI) today announced that they have entered into an agreement under which Time Warner Cable will acquire NaviSite, a premier provider of enterprise-class hosting, managed application, messaging and cloud services, for $5.50 per share in cash, or a total equity value of approximately $230 million.
“Our commercial services business is a key growth driver for the company and one in which we continue to see great opportunity,” said Glenn Britt, Chairman and CEO of Time Warner Cable. “NaviSite provides us with a successful managed services business and a new, innovative managed cloud platform representing significant new growth opportunities. We expect to build upon NaviSite’s successful enterprise-class offerings, and their operational capabilities, infrastructure and expertise to more rapidly create a robust managed services offering for small and medium sized businesses. This transaction is consistent with our capital allocation strategy – selectively investing in our business to accelerate growth while continuing to return capital to shareholders.”
The acquisition provides Time Warner Cable Business Class, Time Warner Cable’s commercial services business, an immediate presence in the managed services market with NaviSite’s more than 1,200 customers. Following the completion of the acquisition, Time Warner Cable plans to continue the exceptional service of NaviSite’s Enterprise customers and to use NaviSite’s operational expertise and enterprise-class infrastructure to meet the rapidly growing demand for managed services offerings from Time Warner Cable’s existing and future small and medium-sized business customers.
“On behalf of all the employees of NaviSite, we are delighted to join the Time Warner Cable family,” said R. Brooks Borcherding, President and CEO of NaviSite. “Our valued customers can rest assured knowing that NaviSite and Time Warner Cable are committed to helping them grow their businesses and to delivering the reliability, innovation, and customer service they have come to expect. We also look forward to powering Time Warner Cable’s development of innovative managed and cloud services for its commercial customers.”
The transaction represents a 33% premium to NaviSite’s Tuesday’s closing price. The transaction also represents an attractive value to Time Warner Cable. The acquisition is expected to be accretive to Time Warner Cable’s EPS and Free Cash Flow and will not have a material impact on leverage ratios. Time Warner Cable expects to utilize NaviSite’s net operating losses, which Time Warner Cable believes will yield a net present value of approximately $40 million in tax savings after closing. The transaction is expected to close in the second calendar quarter of 2011 and is subject to NaviSite stockholder approval, expiration or early termination of the Hart-Scott-Rodino antitrust waiting period and other customary closing conditions.
NaviSite employs approximately 570 people worldwide. It operates ten data centers in the United States and the United Kingdom, including two SAS 70 Type II certified data centers, and network operations centers in Gurgaon, India and Andover, Massachusetts.