Cinven and Warburg Pincus acquire Casema

Cinven and Warburg Pincus have agreed to acquire Casema from a group of investors including Carlyle Group, Providence Equity Partners and GMT Communications Partners for €2.1bn.

Warburg Pincus is adding its stake in Dutch cable operator Multikabel, valued at about €750m, as part its equity. This will give the new enlarged company an enterprise value of circa €2.85bn. Both Cinven of the UK and US firm Warburg Pincus will hold an equal equity stake in the newly combined business.

This is the first investment from the €6.5bn fourth Cinven fund, which closed last month.

Carlyle and Providence Partners jointly bought Casema from France Telecom in January 2003 for €665m. Each owned 46%, while GMT Communications Partners, an independent investment firm, held the balance of 8%. Since then, capital expenditure into Casema has amounted to €250m.

According to Carlyle, it has transformed Casema from essentially a provider of analogue television to a provider of triple-play services, including analogue and digital television, broadband internet and VoiP telephony services.

This part of the business is what David Barker, a partner at Cinven, plans to promote. “We expect to invest significantly in driving the growth of the group and look forward to working with Warburg Pincus and all stakeholders to achieve this goal,” he said.

Barker explained that since Casema’s existing network was already offering broadband services, growth would be achieved through marketing to end-subscribers. “We will certainly look at add-on acquisitions, but our focus is on growing the top line,” he said, adding that valuations for Casema and Multikabel had increased in recent years as both businesses were going through periods of very rapid growth.

Casema is currently the third largest cable operator in the Netherlands, serving the central and western parts of the country.

Multikabel, the fourth largest cable operator in the Netherlands, is based in the north of the country. Warburg Pincus acquired Multikabel from German cable operator Primacom for €515m in December 2005.

Together, Casema and Multikabel will serve more than 1.6m customers and had pro forma revenue of €416m for 2005.

Joseph Schull, managing director at Warburg Pincus, who leads the firm’s media investment activities, said: “The Dutch telecommunications market is in the early stages of an extended period of infrastructure and services convergence and we look forward to working with management and Cinven as this new larger company continues to grow and develop,” he said.

Cinven already holds significant investments in European cable companies, including UPC France, Numéricable, Altice One and Ypso Holding.

In March 2005, Cinven and Altice created Numéricable when they bought stakes in the cable operating subsidiaries of France Telecom and Vivendi Universal for €528m.

Then, in November 2005, Cinven gained control of Altice when it paid about €500m for 70% of Altice One, which operates in Belgium and Luxembourg, adding the business to Numéricable.

In February 2006, Cinven and Altice acquired a 40% stake in another French cable operator Ypso Holding, from France Telecom Cable and Canal Plus.

Then last month, Cinven and subsidiary Altice agreed to acquire French cable business UPC France for €1.25bn (US$1.6bn) from US media investor Liberty Global.

In the latest transaction, financial advisers to Cinven and Warburg Pincus were Morgan Stanley, ABN AMRO, Credit Suisse and Rothschild. Goldman Sachs advised Carlyle Group, Providence Equity Partners and GMT Communications Partners.

Losers in this hotly contested auction included BC Partners, Macquarie and trade buyer Liberty Media subsidiary UPC.

All of the above might be seen in the next headline auction for a Dutch cable company, namely that for Kablecom, which is currently in the market with a price tag somewhere in the €2bn to €3bn range.

Alex Wessendorff