Kabel Deutschland Buys Tele Columbus For EUR603 Million Plus Interest
05/21/2012| 05:16am US/Eastern
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Germany's largest cable network operator Kabel Deutschland Holding AG (KD8.XE) said Monday it has agreed to buy peer Tele Columbus to expand its customer base in the cable-television market, marking the next step in the consolidation of the domestic sector.
Kabel Deutschland will pay EUR603 million for Tele Columbus's equity and debt plus accrued interest. Almost EUR600 million is for the repayment of Tele Columbus's debt and only a small part of the purchase price is for the equity, said Chief Financial Officer Andreas Siemen in a conference call.
Tele Columbus provides TV and Internet services to approximately 1.7 million customers, predominantly in eastern Germany, so the deal will extend Kabel Deutschland's customer base. In 2011, Tele Columbus reported revenue of EUR218 million and earnings before interest, taxes, depreciation and amortization of EUR81 million.
Kabel Deutschland has a EUR600 million bank loan to fund the acquisition and aims to close it by the first quarter of 2013, according to Siemen.
"The transaction will strengthen the existing broadband infrastructure competition in Germany," Kabel Deutschland said, as "most of Tele Columbus's customers will be able for the first time to subscribe to Kabel Deutschland's high-speed Internet products and new TV services."
The deal follows a similar transaction announced earlier this year in which Unitymedia bought Kabel BW. The transaction must be approved by the German cartel office, which is expected to look at it critically after asking Unitymedia for concessions in acquiring Kabel BW.
Analysts viewed the news as slightly positive for Kabel Deutschland. Bankhaus Lampe analyst Frank Neumann said the price is close to the expected EUR600 million and the acquisition will likely have an immediate positive impact on Kabel Deutschland's earnings per share.
Kabel Deutschland shares barely reacted to the news. At 0812 GMT, they were up 0.1% at EUR46.25.
Highly indebted Tele Columbus underwent a restructuring in 2010 and early 2011, which led to the company's creditors becoming its main shareholders, said Kabel Deutschland CFO Siemen.
Deutsche Telekom AG (>> Deutsche Telekom AG) was also interested in acquiring Tele Columbus, according to a person familiar with the matter.
-By Friedrich Geiger, Dow Jones Newswires; +49 69 29725 506; friedrich.geiger@dowjones.com
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