By Archibald Preuschat
Of DOW JONES NEWSWIRES
DUESSELDORF -(Dow Jones)- Unitymedia GmbH's preparations for an initial public offering are in full swing and the intention to float will most likely be announced next Thursday, Nov. 12, when Germany's second-largest cable network provider is set to report third-quarter results, a person familiar with the matter told Dow Jones Newswires.
It would be the second major IPO in Germany so far this year after Chinese mobile data card manufacturer Vtion Wireless Technology AG (V33.FF) made a successful debut on the Frankfurt stock exchange in October.
A second person familiar with the matter said the IPO would be for a small tranche of the company's shares, without elaborating.
A spokeswoman at Unitymedia declined to comment.
Mark Chapman, European TMT analyst at London-based CreditSights said he expects a 20% to 25% stake in Unitymedia will be sold to investors.
In 2008, Unitymedia posted adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of EUR436.2 million. Unitymedia's European peers are currently valued at between 5.3 and 7 times 2009 Ebitda, but discounts are common when floating shares. Proceeds from floating a 25% stake in Unitymedia would therefore total around EUR500 million.
Morgan Stanley (MS) and UBS AG (UBS) have been hired to arrange Unitymedia's IPO, according to press reports.
Both people familiar with the matter noted that U.S.-based cable company Liberty Global Inc. (LBTYA) had expressed interest in taking a stake in Unitymedia in recent months.
In 2005, Switzerland's biggest cable network provider Cablecom prepared for an IPO, but was acquired by Liberty Global ahead of the planned listing.
Chapman said that Unitymedia could get more money through an IPO than a sale to a strategic investor.
Unitymedia is majority owned by financial investors BC Partners and Apollo Management, which bought the company in 2003 for EUR1.5 billion.
All three major cable network providers in Germany--Unitymedia, Kabel Deutschland and KabelBW-- are owned by financial investors who are working on exiting their investments because any substantial consolidation in the sector would face major regulatory hurdles, according to Thomas Braun, president of Germany's association of cable network providers.
As a result, an IPO is a good exit scenario for financial investors, according to industry experts.
As of June 30, Unitymedia had 4.6 million basic cable subscribers, 469,000 digital pay-TV subscribers, 802,000 customers for broadband Internet access and 490,000 subscribers for its landline telephone service.
With its triple-play offer of TV, broadband Internet and telephone, Unitymedia competes with Deutsche Telekom AG (DT) in the densely populated federal states of North Rhine-Westphalia and Hesse.
-By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18; archibald.preuschat@dowjones.com
(Paul Sharma in London contributed to this report.)