Tele Columbus AG agreed to acquire Pepcom GmbH for about 505 million euros ($570 million) to combine Germany’s third- and fourth-largest cable providers.
Including debt, the transaction would value Pepcom at 608 million euros, or 9.5 times the target’s projected 2015 earnings before interest, taxes, depreciation and amortization and excluding synergies, Berlin-based Tele-Columbus said in a statement on Sunday. The deal is subject to shareholders’ approval of a 240 million-euro share sale by Tele Columbus.
Tele Columbus shares rose as much as 9.3 percent and traded 3.9 percent higher at 12.35 euros as of 9:37 a.m. in Frankfurt.
Pepcom sells cable TV, high-speed Internet and phones services to about 580,000 subscribers, focusing on cities such as Munich, Nuremberg, Leipzig and Frankfurt. The acquisition would bring the number of German households connected to Tele Columbus’s network to about 3.7 million, the company said. Pepcom had 2014 Ebitda of 57 million euros on sales of 126 million euros.
Germany’s cable industry has been consolidating in recent years. John Malone’s Unitymedia KabelBW GmbH was created out of combinations of regional providers, while market leader Kabel Deutschland Holding AG was acquired by Vodafone Group Plc. Tele Columbus, which held an initial public offering this year, agreed in July to buy PrimaCom Holding GmbH for 711 million euros.
(The spelling of Pepcom was corrected in an earlier version of this story.)