Cable operator Liberty Global Inc. (LBTYA, LBTYB, LBTYK), Monday said it has agreed to acquire Kabel BW Erste Beteiligungs GmbH, the third largest cable TV operator in Germany, for about €3.16 billion or $4.48 billion. The transaction is expected to close in the second half of 2011, subject to regulatory approval.
KBW, which is controlled by EQT Funds IV and V, is one of Europe's largest cable operators with 2.4 million customers, and subscribe to 3.9 million services, including 2.3 million basic cable, 285,000 pay TV, 656,000 telephony, and 627,000 broadband internet.
Mike Fries, President and Chief Executive Officer of Liberty Global, said, "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."
Under the deal, Liberty Global will acquire KBW through a series of transactions for a total consideration of about €3.16 billion or $4.48 billion, excluding transaction costs.
EQT has decided that KBW and its holding company will immediately undergo a recapitalization, in which it is targeting to issue about €2.25 billion or $3.19 billion in new debt financing. The new capital structure will be assumed by LGI upon completion of the transaction.
Liberty Global operates state-of-the-art networks serving 18 million customers across 14 countries, principally located in Europe, Chile, and Australia. Liberty Global's operations also include significant programming businesses such as Chellomedia in Europe.
In December 2010, Liberty Global agreed to buy Poland-based cable operator Aster Sp. z.o.o from funds managed by Mid Europa Partners LLP for PLN 870 million or US$292 million.
With the definitive agreement signed today, Liberty Global would gain a significant stronghold over the European cable TV service.
For the most recent fourth quarter, Liberty Global reported a 42% drop in profit, due mainly to lower income tax benefit and higher interest expense, as compared to a year ago.
LBTYA is currently trading at $41.02, up 16 cents.
LBTYB ended last trading on March 18 at $42.50.
LBTYK is currently trading at $39.55, up 11 cents.
by RTTNews Staff Writer
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