German Cable Operator PrimaCom Said to Be Put Up for Sale

PrimaCom (PRC) Berlin GmbH, the German cable company taken over by lenders last year after its parent’s insolvency, is being put up for sale as German regulators pave the way for consolidation among smaller network operators, said people familiar with the process.

Investment bank Jefferies Group Inc. (JEF) has been hired to prepare the search for a buyer, said the people, who declined to be identified because talks are private. Initial information may be sent to potential bidders next month, one person said.

PrimaCom, based in Leipzig, offers television, Internet and telephone services to more than 1 million households, mostly in eastern Germany. Tele Columbus GmbH, a larger competitor based in Berlin, is also being sold and has attracted interest from Kabel Deutschland Holding AG (KD8), Deutsche Telekom AG (DTE) and Unitymedia GmbH, which is owned by John Malone’s Liberty Global Inc. (LBTYA), people familiar with the process said.

“This could be interesting for a strategic player as well as for private equity companies,” said Jeffrey Vonk, an analyst at ING, who estimated PrimaCom may be worth about 400 million euros ($528 million) based on the number of connected households. “A strategic player can afford to pay more because they immediately get a better fit” by being able to market directly to end customers.

Some potential buyers, including private equity firms, might consider bidding for both PrimaCom and Tele Columbus in an attempt to combine the assets, said one of the people. Germany is set to grow faster than any other cable market in Europe as fewer people in the country use digital and pay-television technologies, said Guy Bisson, an analyst at IHS Screen Digest.

Antitrust Approval

Liberty Global in December won German antitrust approval to acquire the cable operator Kabel Baden-Wuerttemberg GmbH, boosting the U.S. investor’s subscriber base to almost 7 million after buying Unitymedia in 2009. That deal may lead to further consolidation in the sector, the people said.

“The consolidation of Germany’s cable market is continuing,” said Ulrich Trabert, an analyst at Bankhaus Metzler in Frankfurt. “It can be tough for the small operators, because this market is very much about scale.”

Kabel Deutschland, which has backbone infrastructure in the markets PrimaCom operates, could have an interest in the company, because “it might offer direct access to its 1 million connected households,” he said.

PrimaCom spokesman Mattias Persson and Deutsche Telekom spokesman Andreas Fuchs declined to comment on a possible deal. Representatives of Jefferies and Unitymedia were not immediately available for comment.

Kabel Deutschland shares rose 0.83 percent today to 46.27 euros in early trading in Frankfurt, while Deutsche Telekom shares slipped 0.27 percent to 8.54 euros.

Ziggo, Com Hem

The sale of Tele Columbus, which is also owned by creditors after restructuring its debts, is being run by Rothschild, the people said. The company could be valued at 600 million euros to 800 million euros, one person familiar said.

Kabel Deutschland, Germany’s biggest cable company, ended takeover talks with Tele Columbus in 2007, two people familiar with the situation said at the time.

Ziggo NV (ZIGGO), the Dutch cable company owned by Warburg Pincus LLC and Cinven Ltd., raised 804 million in an initial public offering last month. Swedish operator Com Hem AB was sold to BC Partners Ltd. last year in a $2.6 billion deal.

To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Katherine Snyder at ksnyder@bloomberg.net

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