Tele Columbus (ETR:TC1) has continued its acquisition drive by acquiring Pepcom for €608m (US$688m) from Star Capital to reinforce its position as Germany’s third largest cable operator.
Tele Columbus (ETR:TC1) has continued its acquisition drive by acquiring Pepcom for €608m (US$688m) from Star Capital to reinforce its position as Germany’s third largest cable operator.
Taken together with July’s €711m (US$774m) acquisition of Primacom, Tele Columbus has expanded its footprint from 1.7 million homes to 3.7 million since its listing on the Frankfurt Stock Exchange earlier this year.
The €608m purchase price represents 9.5x Pepcom’s expected 2015 EBITDA, and 7.9x when factoring in expected synergies.
Tele Columbus plans to use proceeds from a proposed €240m (US$271m) capital increase, announced in August, to part-fund the deal, alongside an equity bridge loan – to be repaid following the equity raise, cash and other senior financing under existing agreements.
Tele Columbus, advised by JP Morgan on the takeover, expects its leverage to remain at a maximum of 5x normalised EBITDA.
The company expects the deal to close by the end of the year, but no later than 30 April 2016, depending on date of the capital increase.
Because Tele Columbus and Pepcom’s combined revenue of €471m (US$532m) falls below the Bundeskartellamt’s €500m (US$565m) threshold, no antitrust approval is required.
Pepcom had revenues of €126m (US$142m) in 2014 and EBITDA of €57m (US$64m), Tele Columbus said.
Hinting at further acquisitions down the line, CEO Ronny Verhelst (pictured) said: “The addition of Pepcom to the Tele Columbus platform provides a foothold into the attractive B2B business opportunity, geographic diversification for the group and strong scale and synergies potential.”
“In the future, we intend to continue to pursue economically and strategically attractive growth opportunities to drive consolidation and strengthen Tele Columbus’s market position even further.”
Pepcom boasts 1,600 business customers and Tele Columbus cited B2B as a “strategically important pillar” for its future growth. The target’s network covers Frankfurt, Germany’s financial capital, as well as Munich, Nuremberg and Leipzig.