Liberty Media Corp, the cable operator which is attempting to expand into Europe, has pulled out of a $756m deal to acquire France Telecom SA’s Dutch cable operator, Casema NV, after the two sides were unable to come to terms acceptable to Liberty Media.
Under terms of the original agreement, each party had the right to terminate the agreement as both parties were unable to close the transaction by October 31. The deal had been under pressure after the Dutch regulator registered concern over the deal, saying it would hamper competition. Two weeks ago, the regulator promised to extend its inquiry, as Liberty Media already controlled Dutch cable company United Pan Europe Communications NV, which has 2.3 million Dutch subscribers. The acquisition of Casema with its 1.4 million subscribers, would given Englewood, Colorado-based Liberty Media a 60% share of the Dutch cable market.
The move is a blow to France Telecom, which is attempting to reduce its $70.8bn debt burden. It needs to raise $15.1bn to meet debt payments next year. However, it must take comfort in the fact that it is backed by the French government, its single largest shareholder with a 56% stake. The French government has pledged to support the carrier in any way it can, despite the fact that its stock has fallen 71% this year, and its credit ratings are one level above junk.
Yet it is not all doom and gloom. There are reports that the private equity company, Washington, DC-based Carlyle Group, is ready to step in with a bid for Casema. However, analysts are speculating that France Telecom will be forced to lower its $756m asking price, and will have to settle for a price in the $606m region. France Telecom had hoped originally to raise about 1bn euros ($920m) from the sale of the unit.