Global investment firm Kohlberg Kravis Roberts & Co (KKR) has agreed to buy Serbia’s largest cableco SBB/Telemach in a deal reportedly worth €1bn (US$1.35bn).
NYSE-listed KKR announced it has signed a definitive agreement under which funds advised…
Global investment firm Kohlberg Kravis Roberts & Co (KKR) has agreed to buy Serbia’s largest cableco SBB/Telemach in a deal reportedly worth €1bn (US$1.35bn).
NYSE-listed KKR announced it has signed a definitive agreement under which funds advised or controlled by the firm will acquire SBB from PE firm Mid Europa Partners.
Both KKR and SBB said the financial details of the deal will not be disclosed. However, Mid Europa, which acquired SBB in 2007, announced it tripled its money on investment, adding it represents the largest private equity exit in the former Yugoslavia. Media reports value the deal at about €1bn (US$1.35bn).
The transaction, which marks KKR’s first direct investment in Southeast Europe, is subject to customary approvals from local competition authorities and expected to close by Q1 2014 at the latest.
SBB’s current executive management team led by founder Dragan Solak will remain in place and retain a substantial stake in the company, KKR and SBB said.
Mid Europa mandated Credit Suisse to manage the sales process, which reportedly also attracted interest from Telekom Austria, and Liberty Global, as well as from private equity firms Providence, Cinven and Altice.
Last week, news emerged that Telekom Austria was set to drop out of the bidding process because of financing issues. The Austrian incumbent was reportedly concerned it would not have sufficient funds in the wake of the nation’s spectrum auction.
KKR describes SBB as the leading pay TV and broadband operator in Southeast Europe, saying it has about 1.7 million cable and satellite TV, fixed and mobile customers across Serbia, Bosnia, Croatia, Montenegro and Macedonia.
Commenting on the deal, KKR head of telecoms and technology in Europe, Henrik Kraft, said the firm is looking forward to partnering with Solak and his team.
“They have built a strong and sophisticated TV and communications platform and we are excited to support the company in its further growth.”
Meanwhile, Mid Europa associate director Andrej Babache noted the firm’s investment in SBB achieved a number of milestones, becoming the first leveraged buyout in Serbia and in CEE after the collapse of Lehman Brothers, the first CEE recapitalisation with multijurisdictional debt pushdown, and now one of the largest CEE private equity exits.
Mid Europa formed the cableco by merging Serbia’s SBB with Bosnia’s Telemach, acquired in 2007 and 2009 respectively. The PE firm’s consolidation strategy saw it buy and merge a further 17 business into the group throughout the course of its investment. Mid Europa said that, during its ownership, SBB has boosted annual EBITDA by 37%.
KKR, which will partly fund the deal with debt, intends to continue with a consolidation strategy for SBB and potentially list the cableco on the Warsaw Stock Exchange or sell it to a mobile operator, the Financial Times reported.
Founded in 1976 by Henry Kravis and George Roberts, KKR said it had US$83.5bn assets under management as of 30 June.
