Liberty bows out of Telekom bidding

The departure of John Malone and his private equity backers from the race to acquire Deutsche Telekom’s cable TV assets leaves only financial buyers in the E2bn-plus auction.

Deutsche Telekom has named three private equity consortia to proceed with offers for its cable television assets, with US telecoms operator Liberty Media dropping out of the auction process.

 

Liberty, which had joined forces with US private equity houses Apollo International, Blackstone and BFD Capital, was tipped as the most likely winner of the auction, having offered E5.5bn for the same business in 2001. The original offer was blocked by the German cartel office, but the inclusion of financial investors in this round of bidding was expected to alleviate competition concerns. Ultimately however, the consortium’s offer of just over E2bn was deemed too low by the German telecoms operator to proceed.

 

The departure of the Liberty consortium leaves three private equity groups in the running for the business. Remaining bidders include Goldman Sachs, Providence Equity and Apax Partners which are bidding together. Warburg Pincus has joined forces with CVC Capital Partners. Hicks, Muse, Tate & Furst has submitted an individual offer. The three groups have offered up to E2.5bn, some way below Deutsche’s original goal of securing around E3.5bn as it looks to reduce its E63bn debt pile.

 

The sale comprises six regional cable television companies, which equates to 10.5m German households. Deutsche Telekom, which is being advised by Rothschild, has opted not to enter into exclusive talks with any one group and will continue to negotiate with the remaining bidders into November. A final announcement is not expected until the end of the year.