Incumbent Deutsche Telekom (DT) is leading the race for German cableco Primacom, according to two sources close to the situation. While other bidders, including Star Capital-owned Pepcom, have not formally dropped out of the process, DT and the current…
Incumbent Deutsche Telekom (DT) is leading the race for German cableco Primacom, according to two sources close to the situation. While other bidders, including Star Capital-owned Pepcom, have not formally dropped out of the process, DT and the current owners are already drawing up a contract to formalise a deal, the sources claimed.
Deutsche Telekom refused to comment and Pepcom did not reply to requests for comment.
DTK Deutsche Telekabel, which had initially shown interest in the asset, left the process weeks ago after submitting a €240m first round offer, way below seller expectations of €280 to €300m.
One of the sources noted that seller expectations were around 10x EBITDA – considerably higher than the 8x EBITDA multiples paid in recent transactions, including the sale of Tele Columbus to KDG earlier this year and the sale of Pepcom in late 2010.
While Pepcom’s and DT’s offers are both closer to the asking price than DTK’s earlier bid, DT’s offer is seen as preferred by the sellers over Pepcom’s because it is all in cash. Pepcom’s offer is said to include a small cash component only.
An unknown Dutch financial investor has also submitted a bid during the second round, both people familiar with the situation said.
However, sources warned that closing was months away. It might still take several weeks to finalise the contract, they cautioned, followed by a potentially long-lasting review by cartel authorities.
Primacom’s current owners Alcentra Group, Tennenbaum Capital, Avenue Capital and ING are advised by Jefferies on the process.
