US media giant Liberty Global has announced it will buy Germany’s number three cableco Kabel BW for E3.16bn.
Over the past few weeks, other companies, including private equity firms CVC Capital Partnera and Hellman & Friedman, were reported to have…
US media giant Liberty Global has announced it will buy Germany’s number three cableco Kabel BW for E3.16bn.
Over the past few weeks, other companies, including private equity firms CVC Capital Partnera and Hellman & Friedman, were reported to have participated in the bidding process to buy the company from Swedish private equity firm EQT.
Kabel BW itself had announced in mid-March that it would seek an IPO. However, the recent earthquake and ensuing tsunami in Japan have made investors wary and markets more volatile, according to the Financial Times.
The deal will likely see Liberty merge its German cable business Unitymedia, number two in the country, with Kabel BW. But experts in the industry have expressed concerns about the German regulator blocking such a deal because of competition issues.
In the past, the Cartel Office told Germany’s largest cable company Kabel Deutschland (KDG) that it was not allowed to merge with Kabel BW or Unitymedia on anti-trust grounds. The regulator’s main concern is believed to be on the content side rather than the distribution side.
Citing sources close to the matter, the Financial Times wrote that Liberty was confident of gaining the regulator’s approval, arguing that the Cartel has moved on since blocking deals.
In a statement, the US company explained that the deal, which represents a purchase price multiple of about 8.1x Kabel BW’s 2011 EBIDTA under IFRS, is expected to close in the second half of 2011. Liberty is being advised by Goldman Sachs and Freshfields, while Kabel BW has hired JP Morgan and Deutsche Bank.
TelecomFinance reported in February that these last two banks are willing to offer a E2bn staple financing to potential buyers of Kabel BW, which could, according to the Financial Times, mark one of the most highly leveraged deals in Europe since 2007.
In the statement, Liberty also said that EQT has decided to recapitalise Kabel BW and is expecting to issue about E2.25bn in new debt financing.
