Germany’s Kabel Deutschland (KDG) has agreed to acquire fellow local cableco Tele Columbus for €603m (US$770m) plus accrued interest – a price it contends will allow full repayment of the latter’s debt.
KDG said the purchase price amounted…
Germany’s Kabel Deutschland (KDG) has agreed to acquire fellow local cableco Tele Columbus for €603m (US$770m) plus accrued interest – a price it contends will allow full repayment of the latter’s debt.
KDG said the purchase price amounted to a total €618m (US$789m) as of 31 December 2011. The deal is subject to the approval of the Federal Cartel Office (FCO) and KDG expects the antitrust authority to arrive at a decision in the fourth quarter of this year. All going to schedule, KDG foresees the transaction closing in the first quarter of 2013.
In a presentation on the deal, KDG described the deal as “value accretive” as it will enable significant revenue and cost synergies. It will, for example, allow the company to market its products to an extra 1.4 million households. The cablecos’ largely overlapping network footprints will also allow cost efficiencies.
“The transaction enables substantial synergies from both top-line growth and cost efficiencies which will effectively reduce purchase price multiple by more than one turn per year,” KDG said.
KDG raises €600m short term debt
KDG said Morgan Stanley, Deutsche Bank and Goldman Sachs have committed €600m (US$766.5m) in unsecured bridge financing. The bridge is available for the next year and may be either refinanced or rolled into a permanent facility. As a result, the group’s total net debt will increase by ~0.4x EBITDA, but its long-term leverage target of 3.0x-3.5x remains the same.
Tele Columbus mandated Rothschild to organise the sale and KDG’s advisers are Morgan Stanley, Ernst & Young and Hengeler Mueller.
Berlin-based Tele Columbus was also said to have attracted interest from Deutsche Telekom and Liberty Global-owned Unitymedia. The level four cable operator services about 1.7 million customers in 2.1 million households, predominantly in Berlin and eastern Germany. In the 2011 fiscal year, it reported revenues of €218m and EBITDA of €81m.
“The transaction resolves to a large extent the separation of cable network levels as is already the case in the footprints of Unitymedia in North Rhine-Westfalia and Hesse and of Kabel BW in Baden-Wuerttemberg,” KDG said.
A banker familiar with the German cable sector told TelecomFinance in April that KDG was aware a Tele Columbus takeover would present antitrust issues and that it would have to offer divestments to appease regulators.
