Liberty Global has announced it will acquire Germany’s third largest cable operator, Kabel BW, from the Swedish investment company EQT through a series of transactions for a total consideration of approximately €3.16 billion.
Following a weekend of intense bidding the UPC owner, which already holds Germany’s second largest cableco Unitymedia, topped an earlier bid by the private equity firm CVC. Reuters reported that LGI had tabled a new offer of €3.1 billion, topping an earlier €2.95 billion bid from CVC, which had itself edged ahead of Liberty.
Mike Fries, president and CEO of Liberty Global, said in statement: “The proposed acquisition of KBW is great news for our shareholders and, just as importantly, German consumers. This transaction provides us with further access to one of the fastest-growing cable markets in Europe and is fully aligned with our strategy of acquiring world class cable operations that are accretive from a value and growth perspective. In addition, we strongly believe that this will enhance competition in the German marketplace and provide significant benefits to customers who are increasingly demanding faster and more reliable access to broadband services. Together with our existing Unitymedia operation that passes 8.7 million homes and serves 4.6 million customers in the contiguous states of Hesse and North Rhine-Westphalia, Germany will become our largest European market and a key driver for continued innovation in next generation broadband and digital TV services.”
Liberty Global will acquire Kabel BW through a series of transactions for a total consideration of approximately €3.16 billion, excluding transaction costs. This represents a purchase price multiple of approximately 8.1 times Liberty Global’s estimate of Kabel BW’s 2011 EBITDA. EQT was looking for a price of up to €3 billion for the network, which it acquired for €1.3 billion in 2006.
Kabel BW has 2.4 million customers, being present in every second home in Baden-Württemberg, who subscribe to 3.9 million services, including 2.3 million basic cable, 285,000 pay-TV, 656,000 telephony, and 627,000 broadband internet.
EQT has decided that KBW and its holding company will immediately undergo a recapitalisation, in which it is targeting to issue approximately €2.25 billion in new debt financing. The new capital structure will be assumed by LGI upon completion of the transaction.