A consortium involving Macquarie Bank's Korean private equity arm and MBK Partners is poised to acquire a 30 per cent stake in South Korea's second-biggest cable TV operator and intends to buy the remaining shares, say people familiar with the deal.
Macquarie Korea Fund has signed a preliminary deal to purchase the stake from Goldman Sachs for about $650m and agreed to a follow-on deal to jointly hold the stake with MBK.
The deal marks South Korea's first secondary buy-out and underscores the increasing maturity of the country's capital markets. "The deal is almost there," said one person. "Although in Korea nothing is over until it's over."
The sale would net Goldman Sachs a profit of more than $500m, with the US bank having purchased the stake in C&M for Won140bn ($148m) in 2004.
C&M is the biggest cable TV operator in the Seoul metropolitan area, with 2m subscribers, in a sector that is expected to thrive after an expected deregulation of the market.
Sydney-based Macquarie is the biggest foreign investment bank in the country while MBK, set up twoyears ago by former Carlyle Asia chief Michael Kim,has established itself as South Korea's most active home-grown private equity firm.
Macquarie and MBK await a response to an offer made to also jointly purchase the remaining 70 per cent stake from Lee Min-joo, C&M chairman, and other individual shareholders.
The combination of Macquarie and MBK will surprise observers. They are bitter rivals in the cable TV sector in Taiwan.
MBK last year acquired control of Taiwan's China Network Systems, a year after Macquarie Media Group, a satellite fund managed by the bank, and Macquarie Bank, teamed up to acquire Taiwan Broadband Communications from Carlyle.
Macquarie, MBK and Goldman Sachs declined to comment.
Citigroup, advising C&M, and Morgan Stanley, advising MBK, also declined to comment.
If Mr Lee were to sell his stake in C&M to Macquarie and MBK, the deal would give the consortium a prized asset in South Korea's heavily regulated broadcasting sector.
Analysts said the cable TV industry is facing a wave of consolidation as South Korea is expected to relax regulations upon the operators.
Foreign interest in South Korea's cable TV sectoris intensifying as the operators boast strong earnings and the TV rates are expected to increase with the introduction of digital TV services.
