Bidders circle German Kabel

City A.M. Reporter
A CLUSTER of private equity firms are circling Kabel Deutschland, the German cable TV operator chaired by former BSkyB chief executive Tony Ball, it emerged yesterday.

BC Partners and CVC Capital Partners joined forces earlier this week to launch a combined offer for the business. Bain Capital is also considering making an offer, while other firms in the running for a bid are thought to include Hellman & Friedman, Blackstone, Advent and Carlyle Group.

Bankers said Kabel Deutschland could sell for up to €5bn (£4.4bn), in what would be the largest leveraged buyout in more than two years, and that up to €4bn of leverage was available for the transaction.

Morgan Stanley, Deutsche Bank, UBS, JP Morgan, BNP Paribas and Société Générale are providing staple financing for the deal, according to people close to the deal, suggesting that the bids are fully financed.

The banks are thought to have put together a finance package including a bridge loan to a high-yield bond.

Kabel Deutschland is also sounding out options for an initial public offering (IPO).

The firm yesterday reported a nine-month core profit of €486m, adding that it aims to reach €660m in earnings before interest, tax, depreciation and amortisation (EBITDA) in its 2009/2010 fiscal year, which ends on 31 March.

The cable operator is 88 per cent owned by Providence Equity Partners, eight per cent by Teachers’ Pension Plan and four per cent by management.

Kabel Deutschland, which is active in 13 of Germany’s 16 states, declined to comment.