After receiving antitrust clearance from the German regulator earlier today, Liberty Global has swiftly closed the acquisition of cableco Kabel BW (KBW).
Mike Fries, CEO of Liberty, described the transaction as a “major step forward” for Liberty….
After receiving antitrust clearance from the German regulator earlier today, Liberty Global has swiftly closed the acquisition of cableco Kabel BW (KBW).
Mike Fries, CEO of Liberty, described the transaction as a “major step forward” for Liberty. “The combination of [Liberty’s German subsidiary] Unitymedia and KBW creates a powerful platform for innovation and growth,” he said. “Together, our German operations pass over 12 million homes, provide over 10 million subscription services and generate approximately €1.6bn in annualized revenue.”
Earlier today the German Federal Cartel Office had given the green light for the deal, subject to far-reaching conditions.
The FCO said the clearance decision is based on the improved remedy package offered by Liberty in late November, which included not only proposals to provide unencrypted digital free to air TV, to waive any exclusivity in contracts with housing associations and to forego ownership rights of their in-building network, but also included an extraordinary termination right for a specified number of housing associations with longer-term multi-dwelling unit (MDU) contracts in the Unitymedia and KBW footprints.
FCO president Andreas Mundt stated: “This merger could only be cleared with far-reaching commitments by the companies involved. We now see the chance of more competition in the cable markets. With the obligation to open up large long-term contracts with the housing industry and give up further contractual rights as well as the basic encryption of digital free TV programmes, the negative effects of the merger are compensated.”
The FCO conceded that the merger would strengthen the retail oligopoly of existing regional cable providers by reducing the number of players from three to two. It would also have a negative impact on the feed-in market, the regulator concluded. But the remedies offered by Liberty would address anti-competitive effects of the transaction.
As part of the remedies package, housing associations in the network areas of Liberty’s Unitymedia and Kabel BW will be granted a special contract termination right. This will offer them an earlier opportunity to look for a less expensive network operator for their housing units, the FCO said. The special termination right applies to contracts for retail TV services with more than 800 housing units and remaining contract terms of more than three years.
The decision not to encrypt digital free TV programmes would make it easier for rival companies to compete for retail TV service contracts and will thus also have a positive impact on the feed-in market.
The consideration paid by Liberty Global to acquire KBW was based on an agreed upon enterprise value of €3.16bn (US$4.10bn).
