Liberty to acquire German cable firm for $4.5 billion

MUMBAI: Liberty Global has entered into an agreement to acquire Kabel BW Erste Beteiligungs GmbH, the third largest cable TV operator in Germany controlled by EQT Funds IV and V.

Liberty Global will acquire KBW through a series of transactions for a total consideration of nearly $4.48 billion, excluding transaction costs. The transaction is subject to regulatory approval and is expected to close in the second half of 2011. 
Liberty Global president and chief executive officer Mike Fries says, “(After this deal) Germany will become our largest European market and a key driver for continued innovation in next generation broadband and digital TV services. 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.”

Goldman Sachs and Freshfields are advising Liberty Global in connection with this acquisition.

EQT has decided that KBW and its holding company will immediately undergo a recapitalisation, in which it is targeting to issue approximately $3.19 billion in new debt financing. The new capital structure will be assumed by LGI upon completion of the transaction.

Fries also said that this deal will give Liberty further access to one of the fastest-growing cable markets in Europe.

Fries concluded, “We are impressed by the successful business built by KBW’s management team and by their dedication to excellence across all areas of their operation. KBW is well-positioned for continued growth and will complement our existing European operations, as we look to leverage the scale of our global platform for the benefit of German consumers and create long-term value for our shareholders."
KBW provides television, broadband Internet and telephony services in the German federal state of Baden-Württemberg.

As of 31 December 2010, KBW’s broadband communications network passed 3.7 million homes and served 2.4 million customers who subscribed to 3.9 million basic cable, pay TV, telephony and broadband Internet services.

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