Tiscali and Pipex Communications have entered into an agreement for the acquisition of the broadband and voice division of Pipex by Tiscali UK Holdings Limited (“Tiscali UK”).
The enterprise value agreed for the acquisition is £210 million. The final equity value, which will be determined at closing, is subject to adjustment for net debt position, the level of working capital. The acquisition is subject to the approval of Pipex’s Shareholders and clearance by the UK Office of Fair Trading.
The Division, was expecting 2007 sales of over £300 million and an EBITDA of over £20 million on the basis of 1Q07 results and of Tiscali’s own estimates. The Division has in the region of one million active customers, 650,000 voice customers and 570,000 broadband customers – of which, 250,000 are dual play – and 100,000 are SME business customers and approximately 1,400 employees. Following the acquisition, Tiscali UK will have 1.9 million broadband customers.
Tiscali UK has unbundled 800 exchanges, reaching 55% of UK homes with plans to extend this network to over 1,000 sites covering at least 65% of the UK’s addressable DSL market. In addition, Tiscali UK has rolled out an extensive next generation high bandwidth network to support both its business customers and new IPTV triple play product.
Mary Turner, CEO of Tiscali UK, said: “The acquisition of Pipex’s broadband and voice division further cements Tiscali’s position as a fully integrated telecom and media operator in the top league of the UK market and underlines our reputation as a major investor and innovator in the full range of broadband services.
“Significant synergies and efficiencies can be achieved through this acquisition in particular through network integration, customer migration and indirect costs efficiencies. Over a four-year period, we estimate cumulated synergies in the region of £150 million at EBITDA level ca £50 million to secure the synergies and efficiencies. In addition, we will be able to offer our new Pipex customers the full range of Tiscali’s compelling and innovative services including broadband, telephone and TV. This acquisition provides us with an even greater opportunity in rolling out our double and triple play offers.”
Peter Dubens, Executive Chairman of Pipex, said: “The Board of Pipex is pleased to agree to the sale of the voice and broadband division, which we feel recognises the strong market position we have built over the last three years. Tiscali’s commitment to investment in LLU, along with the new TV services it is introducing will offer our existing customers value and choice in the future.”