Blackstone, Providence in multibillion recap

The two firms have secured a 40 percent stake in media conglomerate Freedom Communications, which is estimated to be worth between $1.5 billion and $2 billion.

California media group Freedom Communications has completed a multibillion dollar recapitalisation with The Blackstone Group and Providence Equity Partners, giving the two private equity houses a 40 percent ownership stake in the company.

Specific terms of the transaction, which was announced in October, were not disclosed, though various news reports and market analysts are pegging the deal between $1.5 billion (€1.25 billion) and $2 billion (€1.67 billion).

According to the Associated Press, the recapitalisation was arranged to allow disgruntled shareholders to sell off their holdings in the company while allowing the remainder of Freedom to be held by members of the Hoiles family. RC Hoiles started the company in 1935 with his purchase of the newspaper The Orange County Register.  Some members of the Hoiles clan reportedly sold their stakes in the company as part of the recap.

Alan Bell, Freedom president and chief executive officer, will retain his role along with the rest of the senior management team.

A number of media companies had also bid for the company, including Virginia-based Gannett, the publisher of USA Today, and Denver-based Media News Group, which had offered the Hoiles family $1.83 billion in cash for Freedom, AP said.

Providence, Rhode Island-based Providence Equity Partners specialises in media and communications, with more than $5 billion in equity commitments. The firm made the Freedom investment out of its $2.8 billion Fund IV.

New York-based private equity powerhouse Blackstone contributed to the deal with equity from its $2.2 billion Blackstone Communications Partners fund.