Consolidated shareholders approve private equity acquisition

Consolidated Communications is one step closer to taking its company private, as shareholders on Wednesday approved the proposed $3.1 billion acquisition by Searchlight Capital Partners and British Columbia Investment Management Corporation (BCI).

Approximately 75% of Consolidated’s shareholders voted yes on the private equity deal, which is expected to close by the first quarter of 2025. Robert Currey, chairman of Consolidated’s board, said in a statement the transaction will provide “financial flexibility and access to capital” that will help the operator expand broadband across the rural U.S.

Consolidated has said that without private equity backing it will be forced to slow the pace of its fiber build, from more than 300,000 annual passings to roughly 45,000-75,000 passings per year.

The company also warned shareholders if the Searchlight/BCI acquisition isn’t approved, Consolidated expects to complete its fiber build by 2029 – three years after its original target.

Searchlight and BCI first proposed to take Consolidated private in April 2023, with the former already owning 34% of the company’s shares. The PE firms plan to acquire the remaining common stock for $4.70 per share.

Not all of Consolidated’s investors were on board with the deal. Wildcat Capital Management, which owns approximately three million shares, has said it believes Searchlight and BCI’s offer “severely undervalues” Consolidated’s equity. Wildcat suggested raising the enterprise value of the transaction to $4 billion.

Private equity picks up in telecom

Aside from Consolidated, Searchlight has invested in ISPs like All Points Broadband and Ziply Fiber. But it’s not the only private equity player in the space.

Grain Management, which considers itself a broadband specialist, has a stake in companies like Great Plains Communications, Ritter Communications, LightRiver and Quintillion.

Other notable private equity firms in telecom include Apollo Global Management, which formed the ISP Brightspeed from Lumen ILEC assets, DigitalBridge and activist investment firm Jana Partners, which last fall took a stake in Frontier Communications.