Liberty Global in talks to buy Polish cable operator Multimedia

[June 10, 2016]  By Adrian Krajewski

WARSAW (Reuters) - Liberty Global, the owner of Poland's largest cable operator UPC, is in talks to buy UPC's local rival Multimedia to create a business covering half of the Polish cable market, three market sources told Reuters on Friday.

Liberty Global, owned by U.S. billionaire John Malone, is the world's largest international TV and broadband company, operating in over 30 countries.

According to Puls Biznesu daily, which broke the news, the potential partners may have to spin off parts of their networks to gain the Polish competition watchdog's approval for a combination with 2.2 million subscribers and 2.2 billion zlotys ($574 million) in annual revenue.

"UPC is in advanced talks with Multimedia, although there are still a few things to settle, including the price, which has always been key for Multimedia owners," a source with knowledge of the matter said.

"They would not go lower than nine times Multimedia's EBITDA, which may prove hard to swallow for any potential buyer," another source added.

Multimedia, which ended 2015 with adjusted core profit (EBITDA) of 356 million zlotys, has been up for grabs since its owners and co-chairmen Tomek Ulatowski and Ygal Ozechov delisted the group in 2011.

Both UPC Polska and Multimedia declined to comment.

UPC and Multimedia have reportedly been in talks in 2012, and Multimedia owners tried to re-list it in Warsaw a year later, but both attempts stumbled on price.

UPC may also be willing to join private equity funds in the race for Poland's second largest mobile operator, Play.

According to sources, Play owners put the operator on the block again after postponing the sale earlier this year, with Bank of America Merrill Lynch (BAML) and UBS running the process.

Tollerton fund, controlled by Greek businessman Panos Germanos, owns 50.3 percent of Play, with the rest in the hands of Novator fund, controlled by Icelandic businessman Thor Bjorgolfsson. Both refused to comment.

Play, with over 14 million users, covers 25 percent of the Polish mobile market, competing for market share with the local units of French Orange  and Deutsche Telekom, as well as Poland's largest media group, Cyfrowy Polsat.

"UPC will surely look at the Play sale, which should officially kick off this summer," a market source said. "When you add Multimedia and Play to UPC, you get a package which no one else on the market can match."

($1 = 3.8349 zlotys)

(Additional reporting by Pamela Barbaglia in LONDON and Angeliki Koutantou in ATHENS; Editing by Keith Weir)

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