Warburg and Cinven buy Essent Kabelcom for €2.6bn

Warburg Pincus and Cinven, the US and European private equity firms, have won a €2.6bn auction to buy Essent Kabelcom, a Dutch cable operator, following the withdrawal of Liberty Global, a US cable business.

Warburg Pincus and Cinven have beaten off competition from Liberty Global, a US broadband cable operator, to buy Essent Kabelcom, a Dutch cable company for €2.6 billion and create the Netherlands’s largest operator in the sector.
The two buyout firms plan to merge Essent Kabelcom with Casema and Multikabel, two Dutch cable television rivals already owned by Warburg and Cinven, they said today. 
Together, they will serve over 3.3 million customers and have revenue of approximately €870 million for the financial year ended 31 December 2005.

Schull: Dutch telecoms market undergoing convergence

The two firms partnered on a deal for the first time last month to acquire Casema from private equity owners The Carlyle Group, Providence Equity Partners and GMT Communication Partners in a €2.85 billion deal.

As part of that deal, Casema is being merged with Multikabel, a Dutch cable operator Warburg Pincus acquired for €515 million in December 2005.
“The Dutch telecommunications market is in the early stages of an extended period of infrastructure and services convergence,” said Joseph Schull, a managing director at Warburg Pincus.

David Barker, partner at Cinven, said that the firm had been looking at the Dutch cable market for at least two years: “Casema, Multikabel and Kabelcom are all attractive businesses individually and have demonstrated excellent growth in the provision of telephony, broadband and digital television services to existing analogue customer bases. By putting them together, we’re providing a platform for the best in triple play provision and an opportunity to exploit the growth opportunities those business present.”

Barker said that there are no plans to make further bolt-on acquisitions in the Dutch cable market. He added that the investment had been made from Cinven’s fourth fund, which closed on €6.5 billion at the end of June.

Essent Kabelcom, headquartered in Groningen, is the second largest cable company in the Netherlands, providing television, internet, radio and telephony services to approximately 5 million people in the north, east and south of the Netherlands through 1.8 million cable subscriptions.
Liberty Global was the preferred bidder in the auction for Essent Kabelcom but pulled out yesterday, with a spokesperson telling Reuters: “We did look at it, we did like it, but in the end the other side had a couple of issues, so we stuck to our acquisition discipline.”
Liberty Global has sold off a number of its European assets to private equity firms in the past year as it focuses on areas where it has “significant in-country scale”. 

Morgan Stanley, ABN AMRO, Credit Suisse, ING and Rothschild acted as financial advisers to Cinven and Warburg Pincus on the Essent Kabelcom deal.

Warburg Pincus has been busy in the last month. The global private equity firm bought Wall Street Systems and Trema, two treasury and capital market transaction processing businesses, in a $200 million double transaction earlier this week. Last week, Warburg led a $500 million investment to fund the creation of Aeolus Re, a Bermuda-based reinsurance company, and floated WNS Global Services, a business process outsourcing company, on the New York Stock Exchange in a $224 million offering. In early July, the firm acquired Brandywine Senior Care, a US care homes operator, for $150 million.