Private equity firm CVC is set to seal Europe's biggest leveraged buyout of the year, offering 2.95 billion euros ($4.17 billion) for German cable operator Kabel Baden Wuerttemberg. The offer for the country's third-largest cable company appeared to beat bids from rival Hellman & Friedman and John Malone's Liberty Global, putting CVC in lead position, two people familiar with the situation said.
Liberty Global, which owns larger German cable rival Unitymedia, is said to have placed a rival bid of up to 3.2 million euros, according to the Wall Street Journal, citing unnamed sources. Swedish private equity owner EQT had been looking at a possible stock market listing for KBW at the same time as it was exploring a sale and had been hoping to land at least 3 billion euros, sources said earlier this week.
CVC's offer is slightly below that target, but a sale would avoid a risky flotation just a day after EQT and Goldman Sachs shelved plans to take Danish outsourcing firm ISS public. EQT and Goldman decided in favour of a public listing for ISS after turning down an offer from Apax Partners in January valuing that business at about $8.5 billion.
Germany's cable market - considered ripe for consolidation for years - poses a big threat to dominant telecom firms because cable companies now also offer telephone and Internet, eating into telecoms businesses. The Swedish buyout house, backed by the Wallenberg family, will decide this weekend whether to sell KBW - which has 2.3 million users - to CVC, sources familiar with the situation said. EQT said no decision had been taken yet.
The market turmoil in the aftermath of the nuclear catastrophe in Japan and fighting in Libya has rocked financial markets, taking a possible IPO off the table but working in the bidders' favour. One of Europe's foremost private equity firms, CVC invested heavily last year, entering into 10 deals including the acquisition of a minority stake in theme parks operator Merlin and buying Swiss telecoms business Sunrise. CVC is investing from its 11 billion euro fund, one of the largest raised since the credit crisis.
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