Kabel Deutschland Planning €1 Billion IPO

FRANKFURT/LONDON (Reuters) – Top German cable provider Kabel Deutschland plans to raise at least 1 billion euros ($1.42 billion) in an initial public offering (IPO) as early as the second quarter, people familiar with the matter said.

Kabel Deutschland’s owners are picking bookrunners for a potential listing as they prefer the public market to a sale to a trade rival, the people said.

Kabel Deutschland declined comment.

Nearest rival Unitymedia had also planned a listing, but was bought by Liberty Global (LBTYA.O) (LBTYA.O) in a $3 billion deal last year. [ID:nBNG19819]

The Liberty Global deal valued Unitymedia at about 7.4 times 2010 earnings before interest, tax, depreciation and amortisation (EBITDA). On the same basis, Kabel Deutschland should be worth 4.8 billion euros.

Kabel Deutschland is 88 percent owned by private equity firm Providence Equity Partners, 8 percent by Teachers’ Pension Plan and 4 percent by management.

Revenues grew by 10 percent to 735.5 million euros for the six months ended Sept. 30.

Free cash flow increased by more than 40 percent to 169.4 million euros over the same period a year ago, thanks to an improving margin, which climbed to 23 percent from 17.9 percent.

It cut its debt ratio to 3.69 times its annualised EBITDA of 654 million euros, down from 4.46 a year earlier. ($1=.7040 Euro)

By Philipp Halstrick and Daisy Ku