Poland’s largest media group Cyfrowy Polsat has agreed to buy a majority stake in the owner of mobile operator Polkomtel in a PLN5.15bn (US$1.65bn) deal.
Cyfrowy will issue 243.93 million new shares to finance the transaction, which will be taken up…
Poland’s largest media group Cyfrowy Polsat has agreed to buy a majority stake in the owner of mobile operator Polkomtel in a PLN5.15bn (US$1.65bn) deal.
Cyfrowy will issue 243.93 million new shares to finance the transaction, which will be taken up by shareholders in Metelem Holding Company, the sole owner of Polkomtel.
Following the merger as it is currently structured Metelem shareholders Argumenol Investment, Karswell and Sensor will own 7.52%, 20.47%, and 10.14% respectively of Cyfrowy Polsat.
The new Cyfrowy shares are valued at PLN21.12 (US$6.78) each.
Cyfrowy also wants to acquire the remaining 16.2% stake in Metelem held by the European Bank for Reconstruction and Development (ERBD).
Talks with EBRD continue, but if the bank accepts its offer, Cyrfrowy will issue an extra 47.26 million new shares. In this case Argumenol would own 7.09% in Cyfrowy after closing, while Karswell would have 19.29%, Sensor 9.55%, and the EBRD 5.77%.
Both Cyfrowy and Metelem are controlled by billionaire Zygmunt Solorz-Zak.
The deal values Metelem at PLN6.15bn (US$1.97bn), implying an EV/EBITDA ratio of 5.7 times, excluding synergies, Cyfrowy said, adding that this is below the trading multiples of peers and recently-completed transactions.
The buyer’s management board estimates the deal will generate operational synergies of about PLN3.5bn (US$1.12bn) and financial synergies of PLN500m (US$160.45m), brought about by better debt terms, through to 2019.
The deal will create Poland’s largest media and telecoms group with estimated annual revenue of nearly PLN10bn (US$3.21bn), Cyfrowy said.
SUBHEAD Cyfrowy plans refinancing
The company expects the deal to close in Q2 2014, but it is subject to Cyfrowy shareholders approving the issue of shares to Metelem shareholders as well as the successful refinancing of Cyfrowy’s existing debt. Cyfrowy expects it will complete the refinancing in Q2 2014.
Cyfrowy and Metelem’s combined net debt totals PLN12bn (US$3.85bn), or 3.1 times their joint EBITDA, Cyfrowy said, adding that it wants to reduce this to below 2.5 times by the end of 2016.
Cyfrowy expects both companies will generate significant and stable free cash flows which will enable it to do so.
Cyfrowy management board president Dominik Libicki said he believes the deal will provide both Cyfrowy and Polkomtel with new opportunities in their highly competitive markets.
“The strategy of Cyfrowy Polsat Group, based on providing the best entertainment and telecommunication services using the latest technologies on all consumer devices, remains unchanged. Polkomtel fits in perfectly and provides a fantastic opportunity for significant acceleration of its execution”.
Polkomtel board member Wojciech Pytel highlighted that he expects significant operational and financial synergies and noted that Polkomtel would be able to provide customers with a “unique” combination of products and services from both companies.
Solorz-Zak acquired Polkomtel, which operates under the brand name Plus, for PLN18.1bn (US$5.8bn) in 2011 – Poland’s biggest ever leveraged buyout.
Polkomtel is Poland’s most profitable phone company with 14 million clients, 7.4 million of whom are on contracts, according to Cyfrowy.
Cyfrowy claims to serve more than 3.5 million households.
