Ziggo Owners Said to Seek as Much as $2.1 Billion in IPO
April 06, 2011, 10:22 AM EDTBy Zijing Wu
(Updates with IPO managers in third paragraph.)
April 6 (Bloomberg) -- Ziggo BV’s owners may seek to raise as much as 1.5 billion euros ($2.1 billion) in an initial public offering of the Dutch cable-television company, said two people with knowledge of the matter.
Ziggo, controlled by private-equity firms Cinven Ltd. and Warburg Pincus LLC, may sell 25 percent to 50 percent of the company in a share sale, the people said, declining to be named because the talks are confidential. The company has an equity value of about 3 billion euros and a total value of 7 billion euros including debt, said the people.
Cable companies are benefitting from increasing appetite for high-definition content and broadband Internet. Demand for such services is allowing cable companies with fast triple-play services -- television, Internet and phone -- to boost growth and ring in profit. Ziggo has retained Deutsche Bank AG, JPMorgan Chase & Co., Morgan Stanley and UBS AG to manage the IPO, according to one of the people.
A sale to another company is still an option. Liberty Global Inc., the cable operator controlled by U.S. billionaire John Malone, said in February that it would look at Utrecht, Netherlands-based Ziggo if the owners wanted to sell. A decision on a possible IPO hasn’t yet been made, said Martijn Jonker, a spokesman for Ziggo.
Acquisition Spree
“It would make a lot of sense for Liberty to buy Ziggo to combine it with their existing Dutch operations and wring out costs to get scale and bolster profitability,” Andrew Hogley, an analyst at Espirito Santo in London, said via phone today. “But the question is whether Liberty and its shareholders are willing to spend a lot of money on another acquisition after they already agreed to buy a German operator last month.”
Liberty Global Chief Strategy Officer Shane O’Neill said in February that Ziggo “would actually be a better fit” than Germany’s Kabel Baden-Wuerttemberg GmbH, which Liberty a few weeks later agreed to buy for about 3.16 billion euros by trumping offers from private-equity firms. Liberty Global spokesman Bert Holtkamp yesterday declined to comment further and referred to O’Neill’s earlier comments.
Some of the company’s bonds rose as investor perceptions of its creditworthiness improved. Ziggo’s 1.2 billion euros of 8 percent notes due 2018 are trading at about 106.09 cents on the euro to yield 6.9 percent, up from 105.83 cents yesterday, according to Bloomberg Bond Trader prices.
Demand
Liberty’s UPC Broadband unit operates in 10 European countries, including the Netherlands, according to its website. Kabel BW was Malone’s second German acquisition in less than two years to benefit from demand for broadband Internet access via cable. Liberty agreed to buy Unitymedia, Germany’s second- largest cable operator, in November 2009.
Ziggo, which serves about 3.2 million households and has 1.5 million broadband Internet customers, posted sales of 1.38 billion euros in 2010, an increase of 7.1 percent. Earnings before interest, taxes, depreciation, amortization and costs to integrate predecessor businesses rose 12.7 percent to 783.4 million euros. Ziggo was formed by the combination of Multikabel, Casema and the cable unit of Essent Kabelcom.
Liberty Chief Executive Officer Mike Fries also said in February that he would look at the asset if Ziggo’s owners wanted to sell. Liberty would be “opportunistic” about buying cable assets in western Europe as it seeks to expand, Fries said at the time.
Biggest IPO Since 2006
At the top of the target range, a Ziggo IPO would be the biggest in the Netherlands since KKR & Co. raised $5 billion in 2006, before it last year delisted in Amsterdam and moved the shares to New York. Aviva Plc raised 1.02 billion euros selling shares of its Dutch unit Delta Lloyd in November 2009, the most recent IPO in the country, according to Bloomberg data.
Edi Cohen from public relations firm Citigate declined to comment on behalf of Cinven and referred questions to Ziggo. A spokesman for Warburg Pincus declined to comment.
Germany’s largest cable operator, Kabel Deutschland Holding AG, has risen 78 percent since listing on the Frankfurt stock exchange in March last year.
Kabel Deutschland said yesterday that BlackRock Inc. may increase its share in the company over the next 12 months. BlackRock currently holds 11 percent of Kabel Deutschland shares, according to Bloomberg data.
“Cable companies such as Ziggo and Kabel Deutschland have become real competitors for established telecommunication companies such as KPN or Deutsche Telekom and their broadband offerings are often faster and better,” Espirito Santo’s Hogley said. “This is a good time for Ziggo’s owners to sell the asset and they should be able to fetch a decent price.”
--With assistance by Ragnhild Kjetland in Frankfurt, Maaike Noordhuis in Amsterdam and Jason Kelly in New York. Editors: Simon Thiel, Jeff St.Onge.
To contact the reporter on this story: Zijing Wu in London at zwu17@bloomberg.net;
To contact the editor responsible for this story: Jeffrey St.Onge at jstonge@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net
