Germany's Tele Columbus agreed to buy Pepcom for €608M

German telecom providers; Tele Columbus and Pepcom, have agreed to consolidate for €608M or $570M. The acquisition will benefit 3.7 million subscribers in Germany. Tele Columbus plans to improve its media service upon the deal.

The acquisition between cable companies continues as Tele Columbus, the third largest in the market, made a deal to purchase one of its competitors, Pepcom, through Star Capital investment firm, Broadband News reported.

Correspondingly, Bloomberg specified that Pepcom had €57M EBITDA (earnings before interest tax debt and amortization) on sales of €126M in 2014, though its earnings could be lower based on other equity measures.

The two companies came up with the agreement on September 13. The total price amounts to €608M, excluding the net debt and Pepcom's 30% stake in KMS (Kabel&Medien Service) which is worth €505M.

The acquisition must be approved by shareholders with Tele Columbus' proposed capital increase. An extraordinary general meeting (EGM) will be on September 14. As indicated in the report, the closing will depend upon the proposal's listing of resolution.  It is expected to end by April 30, 2016.

With Pepcom's 810, 000 subscribers, Tele Columbus expects to reach 3.7 million homes. The company will ensure to pursue growth opportunities in the future to strengthen its position in the market.

Being the third in the row next to Kabel Deutcshland and Unitymedia, Tele Columbus plans to enhance its multimedia services. "The combined customer base of approximately 3.7 million connected homes provides us with new opportunities to develop and market attractive and competitive multimedia services for our partners in the housing industry and the users in our networks," Tele Columbus CEO Ronny Verhelst said.

According to a news from Reuters, Tele Columbus covers 2.8 million homes in Saxony, Saxony-Anhalt, Berlin, Thuringia and Brandenburg. It renders internet / telephone service and Premium TV.

On the other hand, Pepcom dominated households in Nuremberg, Frankfurt am Main, Hesse and Bavaria.

The deal between the two companies will build a strong force in the cable market. However, it is not yet clear whether Tele Columbus will remain as an independent name or the two will tie up to compete with the top players.