FRANKFURT (Reuters) - German cable company Tele Columbus has agreed to buy PrimaCom for 711 million euros ($777 million) in cash, combining the country’s third and fourth biggest operators as consolidation accelerates across Europe.
Germany has been slower to allow cable mergers than some other European countries which are down to one provider. It is one of the most important markets for both Vodafone and Liberty Global, who are exploring asset swaps.
Combining Tele Columbus and PrimaCom will create a group supplying about 2.8 million homes, placing it third behind Vodafone-controlled Kabel Deutschland and Liberty Global’s Unitymedia.
The heads of Kabel Deutschland and Unitymedia told Reuters last month they believed European regulators had become more relaxed about cable consolidation.
The industry faces increasing competition from telecoms companies in broadband and TV as well as from streaming services such as Netflix, meaning regulators may define the market more broadly than in the past.
Vodafone and Liberty Global have not given details of what assets they may swap. They said last month the talks were at an early stage.
Tele Columbus said on Thursday that the transaction did not need regulatory approval and was not subject to merger control review. It expected to close the deal on July 31.
Primacom was owned by a group of former creditors including ING and several fund managers.
Germany’s cartel office, which two years ago blocked an attempt by Kabel Deutschland to buy Tele Columbus, confirmed that the companies’ combined revenues of under 500 million euros meant they did not need to seek clearance.
Tele Columbus said in a statement: “With the acquisition of PrimaCom, Tele Columbus is successfully driving the consolidation of the German cable market and underlining its leading role in this process.”
Shares in Tele Columbus rose to the top of Germany’s small-cap index, gaining 6.9 percent to trade at 13.50 euros by 0935 GMT, compared with a 1.1 percent rise in the index.
The combined company will have a strengthened focus on Tele Columbus’s core eastern German regions as well as western regions including prosperous Baden-Wuerttemberg.
Its total subscribers will still be well behind Kabel Deutschland’s 8.3 million connected households and Unitymedia’s 7.l million customers.
Tele Columbus, which floated on the stock exchange in January, said it would pay for the acquisition through a combination of cash and financing that includes a 125 million euro equity bridge loan.
It will launch a rights issue, and possibly other equity measures, in the second half of the year to repay its debt.
Additional reporting by Nikola Rotscheroth in Duesseldorf; Editing by Stephen Coates and Keith Weir