Liberty Global pays $3 billion cash for Unitymedia
Liberty Global, the international cable operator controlled by John Malone, has agreed to buy Unitymedia from a private equity group for $3 billion in its first German acquisition.
The sale of Germany’s second-biggest cable network by a shareholder group led by BC Partners and Apollo is worth $5.2 billion including assumed debt and marks the largest private equity exit in Europe this year.
The private equity group bought Unitymedia for 1.5 billion euros ($2.2 billion) in 2003.
Unitymedia, second behind Kabel Deutschland, has 4.5 million subscribers in a region covering 10 of the country’s 20 biggest cities, including Cologne, Duesseldorf and Frankfurt.
Liberty Global was created from the combination of cable pioneer Malone’s Liberty Media International and UnitedGlobalCom in 2005.
It operates in Austria, the Netherlands, Eastern Europe, Asia and Latin America and had until now avoided Germany because of regulatory complications. Unitymedia has taken some measures to simplify operations.
BC Partners and Apollo had been running a dual-track process in which they also considered an initial public offering. Liberty Global now plans to increase Unitymedia’s debt to $3.7 billion and use part of the proceeds to fund the equity buy.
The remainder would be funded by a combination of existing liquidity, proceeds from the sale of $750 million in convertible notes and the sale of 6 million Series A and C shares to SPO Partners & Co for about $128 million, Liberty said no credit check payday loan.
GOOD TIME FOR A COMEBACK
Malone, known for creating Byzantine holding structures, has tried to make inroads into Germany before.
In 2001, Liberty Media launched a multi-billion euro bid to become Germany’s largest cable operator by buying assets from Deutsche Telekom and Deutsche Bank. That was eventually blocked by German regulators.
Guy Bisson, a senior analyst at research firm Screendigest, said Liberty tends to pursue market leaders and Kabel Deutschland would have been the natural choice.
“But as a strategic player Unitymedia is the stronger one,” Bisson said because Unitymedia had a higher uptake of digital TV and higher revenue-generated units (RGU) per household.
Asked about regulatory obstacles that thwarted Malone before, Bisson said: “In the late 1990’s everyone thought the German market would turn the corner and become more commercial but that never happened…It’s starting to happen now, so it’s a good time to get back in the market.”
Arndt Rautenberg of OC&C Consultants said he was curious to see how Liberty would increase Unitymedia’s core profit.