United Group, the pay TV and cable service provider that operates across countries of the former Yugoslavia, has agreed to acquire Bulgarian telecom operator Vivacom for a reported €1.2 billion.
The pay TV operator, owned by private equity outfit BC Partners since March last year, will acquire Vivacom, expanding its geographic reach and cementing its position as a leading telecom player in the south-eastern European region.
Vivacom has 1.8 million customers to whom it provides a range of service including broadband, mobile communications and pay TV.
The deal is expected to close in the second quarter of next year, subject to regulatory approval. It will be financed through a combination of new debt and cash.
Lazard acted as financial advisor to Vivacom, with CMS acting as legal advisor.
Vivacom was put up for sale by a consortium led by Bulgarian businessman Spas Roussev in July, despite an ongoing dispute over ownership of the operator. Roussev’s consortium took control of the company three years ago from Russian bank VTB following the collapse of Bulgarian bank Corpbank, whose owner had a 43% stake in Vivacom. The sale was challenged by Russian businessman Dmitry Kosarev, who has moved to take legal action over the latest sale.
VTB Capital, which retained a stake in the operator, issued a statement to Digital TV Europe that it was “fully divesting its stake in Vivacom as part of the transaction to sell the Bulgarian telecommunications operator to United Group”. VTB Capital, which joined the VTL consortium to invest in Vivacom in 2015, said that “together with its co-investors and new company management managed to substantially increase Vivacom’s enterprise value and maintain its leading positions in the Bulgarian market, which helped generate strong interest for the asset”.
it said that United Group’s acquisition of Vivacom “once again underscores the Bulgarian operator’s leading market positions and a promising outlook. We are confident that the company will continue its sustainable growth under the new ownership.”
VTB Capital said that its own investment was “another example of a successful private equity transaction in the region.”
For United Group, this is the second major acquisition the company has made this year. In June, the Serbia-based company acquired Tele2’s Croatian operation for an enterprise value of €220 million, taking it into the Croatian market for the first time.
United Group owns SBB, the leading cable operator in Serbia, as well as cable operators Telemach Slovenia, Telemach Bosina and Herzegovina and Telemach Montenegro. Its Total TV DTH service is available in all four of those countries as well as in Macedonia and also has an international service aimed at expatriates. Another unit, Net TV Plus, provides OTT TV services internationally, aimed at the former-Yugoslav diaspora.
Citigroup, JP Morgan and LionTree acted as financial advisors to United Group and Paul Weiss acted as legal advisor.
Victorija Boklag, CEO of United Group, said: “Vivacom is a well-run company with strong management and I am excited at the opportunities we have to build an even stronger business. Bulgaria is an attractive market and this acquisition will enable us to diversify the Group further. United Group has a great track record in acquiring and successfully integrating businesses, with more than 100 acquisitions since our inception.”
Nikos Stathopoulos, Partner at BC Partners said: “When we invested in United Group, we identified its business model, technology and regional leadership as key drivers for organic growth, accelerated by acquiring and integrating local companies. With Vivacom, we are pleased to acquire a dynamic telecom operator in a vibrant economy and a growing market that enables us to expand our geographic reach across Europe.”
Roussev, as chairman of the supervisory board of Vivacom said: “This transaction is a great success and a great opportunity for Vivacom, its clients, and more generally for Bulgaria. Thanks to great efforts of all, Vivacom has become one of the most successful European telecom companies. It now welcomes as new shareholders one of the most successful global investors with significant presence in Europe and North-America, BC Partners. Vivacom will play a big role in the future development of United Group, their leading regional telecom and media platform.”
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