Private equity firm Kohlberg Kravis Roberts & Co (KKR) has agreed to buy South-East Europe’s largest pay-TV provider SBB/Telemach Group from fellow sponsor Mid Europa Partners.
Financial details of the transaction were not disclosed, although media…
Private equity firm Kohlberg Kravis Roberts & Co (KKR) has agreed to buy South-East Europe’s largest pay-TV provider SBB/Telemach Group from fellow sponsor Mid Europa Partners.
Financial details of the transaction were not disclosed, although media reports have valued the deal at approximately €1bn (US$1.35bn).
Mid Europa stated that it tripled its return on investment. The PE added that the deal represents the largest private equity exit in the former Yugoslavia.
The SBB/Telemach Group, also known as United Group, comprises a number of satellite and cable pay-TV providers across South-East Europe. Having acquired SBB, the largest pay TV platform in Serbia, in 2007, Mid Europa undertook a buy and build strategy across the region.
In July 2009 it snapped up cable operator UPC Slovenia and post-acquisition rebranded it Telemach. A year later, Telemach expanded its presence to Bosnia and Herzegovina through the acquisition of three local cable operators.
In total, the sponsor’s consolidation strategy has seen it buy and merge 18 businesses over the course of its investment. Mid Europa stated that since its ownership SBB has boosted annual EBITDA by 37%. The merged group’s 2012 revenues were €180m with approximately 1.7 million cable and satellite TV, fixed and mobile customers across six countries.
Mid Europa mandated Credit Suisse to manage the sales process, which reportedly attracted interest from both strategic players, Telekom Austria and Liberty Global, and private equity firms, KKR, Providence, Cinven and Altice.
In early-October, speculation emerged that Telekom Austria was set to drop out of the bidding process due to financing issues. The Austrian incumbent was reportedly concerned it would not have sufficient funds in the wake of the nation’s spectrum auction.
The transaction marks KKR’s first direct investment in Southeast Europe and is expected to close by Q1 2014. According to one report, KKR will partly fund the deal with debt and intends to continue Mid Europa’s consolidation strategy.
KKR stated that the United Group’s current executive management team led by SBB founder Dragan Šolak will remain in place and retain a substantial stake in the company.
Commenting on the deal, KKR head of telecoms and technology in Europe, Henrik Kraft, said: “We look forward to partnering with Dragan Šolak 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, who led the execution of the transaction, commented: “In addition to consistently delivering industry-leading operating and financial performance in each year of our ownership, this investment and the transactions that have created it, have marked a number of milestones that demonstrate Mid Europa’s strong execution capability: the first LBO in Serbia, the first LBO in CEE post the collapse of Lehman Brothers, the first CEE recapitalisation with multi-jurisdictional debt pushdown and now one of the largest CEE private equity exits”.
