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German Authority Approves Liberty Global Deal

Liberty Global chairman John Malone's long-standing efforts to gain a stronger foothold in Germany became reality Thursday after the German regulatory authority signed off on its acquisition of KBW.
Liberty had agreed to purchase KBW, the third largest cable operator in Germany with 2.4 million subscribers, in March for about $4.1 billion. Liberty already owns the second largest German cable company - Unitymedia with 4.6 million subscribers - and the addition of KBW will narrow the gap with Kabel Deutschland, the largest German MSO with 8.8 million customers.
Liberty agreed to several concessions to get the deal approved, including freeing housing associations to break long-term contracts indefinitely; ending exclusivity in long-term housing contracts; and offering unencrypted digital free-to-air television, according to the Federal Cartel Office.
"This merger could only be cleared with far-reaching commitments by the companies involved," Federal cartel Office president Andreas Mundt said in a statement. Adding that in agreeing to the concessions, "the negative effects of the merger are compensated."
KBW, formerly owned by Swedish private equity firm EQT, went on the block last year. Bidders for the properties included Kabel Deutschland and private equity giant CVC Capital Partners.
In a research note, Pivotal Research Group principal and media & communications analyst Jeff Wlodarczak wrote that the concessions are manageable for LGI and the deal provides opportunities for synergies as the KBW properties are adjacent to Unitymedia's existing operations.