U.S. LBO Shops Face Off In Two European Deals –

A number of U.S. private equity firms in the coming months look set to participate in some high-profile acquisitions in Europe.

In Germany, The Blackstone Group and Texas Pacific Group have joined forces with a syndicate of U.S. investors to acquire Deutsche Telekom AG’s cable television network, valued by some industry analysts at approximately $10 billion.

In Italy, TPG appears to have narrowly avoided facing off against GE Capital Services Corp. in the takeover of Piaggio Spa, the manufacturer of Vespa scooters. After news leaked TPG had offered approximately $650 million for the company earlier this month, GE Capital publicly made known its desire to acquire the company, and indicated a willingness to up the offer to approximately $700 million.

At press time, GE Capital issued a statement denying it would make a bid for the company.

German Cable Colossus Set in Sights

Deutsche Telekom’s cable system, composed of nine regional companies, is among the world’s largest, with approximately 17 million subscribers. Based on valuations of U.S. cable properties, which now are being sold for as much as $4,500 per subscriber, the German cable system would be worth as much as $76.5 billion. However, Deutsche Telekom reportedly only has about 6 million subscribers under direct contract, the rest being through affiliate companies. In addition, the company reportedly has told its bankers that it wants to retain a 25.1% stake in any cable property auctioned off.

Blackstone and TPG are part of an investment syndicate led by Denver communications investment group Callahan Associates International LLC. The group also includes BancAmerica Equity Partners, Capital Communications CDPQ (an affiliate of Caisse de Depot et Placement du Quebec) and Angelo Gordon & Co.

The Callahan-led group will be bidding against rival groups including Amsterdam-based United Pan-Europe Communications NV and Microsoft Corp., which is joining with Deutsche Bank AG on the bid.

Blackstone has been involved with four previous cable deals in the U.S. Partners at Blackstone and TPG declined comment.

A Race to Buy the Vespa Brand

TPG also has acknowledged being in advanced talks with Piaggio. A source familiar with the transaction even went so far as to call it a “done deal.” But before the deal was totally done, GE Capital had a try at scuttling TPG’s plans.

Although GE Capital has said it does not wish to disrupt talks between TPG and Piaggio, the investment giant reportedly approached Piaggio executives and shareholders to persuade them that General Electric Co. would offer a better world-wide network through which to grow the scooter maker, which only this year began turning a profit after years of losing money.

TPG, for its part, has impressive credentials to point at-the firm in 1996 acquired Ducati SpA, an Italian motorcycle maker, for approximately $100 million in equity, and took the company public earlier this year on the U.S. markets. As was the case with the Ducati deal, TPG is partnering with Deutsche Morgan Grenfell in the Piaggio acquisition.

GE Capital has since dropped its Vespa ambitions. Not to say the investment giant was not typically aggressive in its deal mongering-in its search for a local partner on the counter-offer, GE Capital approached financial institutions such as Banca Commerciale Italiana, Monte dei Paschi and Banca di Roma, as well as industrial families Moratti, Pirelli and Benetton about teaming up for Piaggio, according to the Italian press.

Only the Benetton family investment arm-21 Investimenti-acknowledged being approached by GE Capital about the deal.