Liberty Global, the largest cable operator outside the US, and Warburg Pincus and Cinven, the private equity firms, are battling it out to win the €3bn (£2bn) auction for Essent Kabelcom, the Netherlands’ second largest cable operator.
Liberty, which is headed by John Malone, the veteran cable investor, had been given preferred bidder status to acquire Essent in a deal that could be valued up to €3bn, according to people close to the situation. But Warburg Pincus and Cinven, jointly, are still vying to take control.
The developments come days after Warburg Pincus and Cinven jointly acquired Casema, the Netherlands’ third largest cable group, for £2.85bn including debt. The business had been owned by rival buy-out firms Providence Equity Partners and Carlyle Group.
UPC Nederland, the country’s largest cable operator, is also understood to have bid for Essent.
The telecoms sector has been one of the most active for deals in Europe with $63bn (£34bn) worth of transactions carried out in the year to date, according to Dealogic, the global data provider.
Unprecedented fundraising by buyout groups and liquidity in the debt markets have fuelled interest in the sector that is attractive because it can offer a growth and the capacity to pay down debt.
As a result, buy-out groups have targeted a variety of telecom businesses, including fixed line, mobile, cable and broadband as well as satellite companies.
Many buy-out firms have also chosen to pursue what is known as “a buy-and-build strategy” whereby several assets are put together with the aim of floating or selling them as one business in the future.
Warburg Pincus and Cinven, for example, are already planning to combine Casema with Multikabel, a smaller cable company with about 300,000 subscribers in the northern Netherlands that Warburg Pincus bought last year.
This year, Liberty said it wanted to get out of “sub-scale” markets in Europe and redeploy the proceeds to expand in its other existing markets, acquiring operations in faster-growing central and eastern European markets, or buying back more shares.
The group has already sold out of Norway, and in March it sold its UPC France subsidiary to Altice, a rival cable operator, and Cinven for about €1.25bn.
Last year, however, Liberty bought Cablecom, the Swiss cable operator, for $2.2bn.