Apollo, BC Partners Selling Unitymedia for $5.2 Billion

FRANKFURT (Reuters) – Liberty Global (LBTYA.O), the international cable operator controlled by U.S. cable pioneer John Malone, has agreed to buy Germany’s Unitymedia from a private equity group for $5.2 billion, its first German buy.

The sale by a shareholder group led by BC Partners and Apollo comprises $3 billion in equity and $2.2 billion in debt, and is the largest private-equity exit in Europe this year.

The private-equity group bought Unitymedia for 1.5 billion euros ($2.2 billion) in 2003.

Unitymedia is Germany’s second-biggest cable network after Kabel Deutschland, with 4.5 million subscribers in a region covering 10 of the country’s 20 biggest cities, including Cologne, Duesseldorf and Frankfurt.

Liberty Global — which operates in Austria, the Netherlands, Eastern Europe, Asia and Latin America — had until now avoided Germany because of regulatory complications. Unitymedia has taken some measures to simplify operations.

BC Partners and Apollo had been running a dual-track process in which they also considered an initial public offering. Liberty Global now plans to increase Unitymedia’s debt to $3.7 billion and use part of the proceeds to fund the equity buy.

The remainder would be funded by a combination of existing liquidity, proceeds from the sale of $750 million in convertible notes and the sale of 6 million Series A and C shares to SPO Partners & Co for about $128 million, Liberty said.



Unitymedia’s Chief Executive Parm Sandhu said Liberty Global had first approached his company three weeks ago, and had spent just a week looking at the business before making up its mind.

“It’s great for Unitymedia… We’re bringing on board a strategic investor and becoming part of the world’s largest cable company,” he told Reuters by telephone.

“That puts us in a very good position to compete with the likes of Deutsche Telekom (DTEGn.DE), Vodafone (VOD.L) and Sky Deutschland <SKYDn.DE.”

The deal values Unitymedia at about 7.4 times estimated 2010 adjusted EBITDA (earnings before interest, tax, depreciation and amortisation), Liberty Global said, or about 6.6 times EBITDA after synergies.

BC Partners Chairman Raymond Svider told Reuters the firm had made an annual internal rate of return of 40 percent, having invested about 300 million euros ($446 million) in the business.

The deal is the second large European private-equity exit to a trade buyer in Europe this year, after Japanese brewer Suntory [SUNTH.UL] bought soft-drinks maker Orangina-Schweppes from Blackstone (BX.N) and Lion Capital (LCHL.OB) for $3.8 billion.

Unitymedia was advised by UBS (UBSN.VX) and assisted by Morgan Stanley (MS.N), Nomura (8604.T), HVB (CRDI.MI) and Latham & Watkins LLP. Goldman Sachs (GS.N) advised Liberty Global.

The transaction is expected to close in the first half of next year. ($1=.6722 euros)



By Nicola Leske and Philip Halstrick
(Additional reporting by Supantha Mukherjee in Bangalore and Simon Meads in London; writing by Georgina Prodhan in London; editing by Jon Loades-Carter and Mike Nesbit)