With a top bid of €3.16 billion ($4.49 billion), John Malone’s Liberty Global has won an intensely fought auction for Kabel BW, Germany’s third-largest cable group.
Liberty aims to merge Kabel BW with its Unitymedia group, the country’s second-biggest cabler, which it acquired in 2009 for some $5 billion. That plan will need antitrust approval.
It’s a situation the topper has found himself in before. In 2001, Malone tried to take over Germany’s entire cable system for $5 billion after the cartel office forced telco giant Deutsche Telekom to sell off its assets, but regulators foiled the plan.
In the current auction, Liberty beat private equity firms CVC, which bid $4.2 billion, and Hellman & Friedman, which dropped out last week.
Kabel BW’s current owner, Swedish private equity firm EQT, scrapped plans to float the cabler in an initial public offering last week after the Japan earthquake rattled capital markets.
EQT acquired Kabel BW, which operates in the state of Baden-Wuerttemberg, from Blackstone for some $1.8 billion in 2006. Since then, the cabler’s annual revenues have more than doubled to $800 million.
Unitymedia has 4.6 million customers in two of the 16 federal states, North Rhine-Westphalia and Hesse. Kabel BW brings an additional 2.3 million customers.
Regulators continue to frown on consolidation in the market. They blocked Kabel Deutschland, Germany’s biggest cable operator with some 12 million subscribers, from taking over both Kabel BW and Unitymedia in 2004.
Liberty execs are undoubtedly hoping the increasing competition between cablers and the growing telcos will help soften the regulators’ tough stance.