Tele Columbus has agreed to acquire Pepcom, the fourth largest German cable network operator, from Star Capital for EUR 608 million on a cash- and debt-free basis. After taking into consideration net debt, debt-like items and the 30-percent minority participation in KMS, the price totals EUR 505 million (equity value). Following the acquisition of Primacom in July and now Pepcom, Tele Columbus will serve approximately 3.7 million homes passed.
Pepcom has over 580,000 unique subscribers and its network passes 810,000 homes. The company has a strong presence in Munich, Nuremberg, Leipzig and Frankfurt am Main. In 2014, Pepcom generated revenues of EUR 126 million and normalised EBITDA of EUR 57 million. The company has a controlling stake of 70 percent in the Bavarian TV and broadband cable company KMS together with Vodafone Kabel Deutschland which owns the remaining 30 percent. In 2012, Pepcom acquired HL Komm, a Leipzig-based provider of telecommunication services for business customers. Pepcom employs approximately 370 people.
Tele Columbus and Pepcom have respectively 57 percent and 58 percent of homes passed two-way upgraded and provided with their own signals via independent networks. Tele Columbus’ strategy is to continue to grow the percentage of households two-way upgraded and connected to Tele Columbus’ own network. In addition, Pepcom’s B2B business will contribute over 1,600 business customers to the group and provide a strategically important pillar for Tele Columbus's potential growth going forward.
The company expects annual run-rate cost synergies of EUR 13 million and capex synergies of EUR 2 million from the merger to be fully realised within 24 months of closing. The closing of the acquisition is subject to shareholder approval of a proposed capital increase of EUR 240 million. An extraordinary shareholders meeting is scheduled for 14 September. The closing is expected to occur by the end of this year and at the latest by 30 April 2016.
