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ABRY Partners Taking RCN Private for $536 Million

(Reuters) – Broadband services provider RCN Corp (RCNI.O) said it agreed to be bought by investment fund ABRY Partners for about $536 million, excluding debt, as private-equity firms return to the deal market.

ABRY’s offer of $15 a share in cash is 22 percent more than RCN’s closing price on Thursday. Shares of the company were trading marginally above the offer price in morning trade on Nasdaq.

The deal, expected to be completed in the second half of 2010, has a go-shop option that allows RCN to scout for better offers.

The investment firm will assume the company’s debt, which was about $730 million as of Sept. 30, 2009.

The deal marks the latest in a line of acquisitions by private-equity firms this year. Earlier this year, TPG TPG.UL acquired IMS Health RX.N for $4 billion and a consortium of private-equity firms bought software maker SkillSoft for $1.2 billion.

RCN provides high-speed Internet and voice services to residential and small businesses and competes with companies such as AboveNet ABVT.PK and Mediacom Communications (MCCC.O). It posted a narrower-than-expected loss for the third quarter.

ABRY Partners, which manages about $2.75 billion in cash, is a Boston-based private-equity firm specializing in media and information technology companies. ABRY owned Muzak, before the music and entertainment company filed for bankruptcy last year. 

Deutsche Bank Securities Inc and Waller Capital Partners LLC acted as financial advisors to RCN for the deal, while SunTrust Robinson Humphrey acted as financial advisor to ABRY.

Shares of Herndon, Virginia-based RCN were up $2.79 at $15.05 in morning trade. (Reporting by Saqib Iqbal Ahmed and Saumyadeb Chakrabarty in Bangalore; Editing by Vinu Pilakkott)