Kabel buys rivals in €2.7bn LBO

Kabel Deutschland, Germany’s largest cable TV operator, jointly owned by Apax Partners, Providence Equity Partners and Goldman Sachs Capital Partners, has agreed to buy its three main rivals for €2.7bn.

Kabel Deutschland, the largest cable network operator in Germany, has agreed to acquire its three main regional competitors: Kabel BW, Iesy eKabel Hessen and Ish in a deal worth €2.7 billion ($3.3 billion).

Kabel is owned equally by Apax Partners, Providence Equity Partners and Goldman Sachs Capital Partners, which acquired the company from Deutsche Telekom in March 2003 for €1.7 billion ($2.1 billion).

The deal will give Kabel complete control of the 18 million-customer German cable TV market, creating one of the largest cable companies in the world in terms of number of customers, if approval is received from Germany's cartel office.

Described by a source close to the deal as “a landmark set of transactions”, the process involved three sets of negotiations, resulting in three different contracts, all completed on the same weekend.

The original investment by Providence Equity Partners in Kabel was made from its $2.8 billion Providence Equity Partners IV fund. The deal represents the firm’s second major transaction of the year, following the IPO of Eircom, the Irish fixed-line telecom provider.

Goldman Sachs invested from its $5.25 billion GS Capital Partners 2000 fund, of which it is understood 25 percent of investments to date have been made in Germany. Apax Partners made its original investment in Kabel from Apax Europe V – a €4.4 billion fund, which is approximately 60 percent invested.