(Adds debt financing in 10th paragraph.)
July 1 (Bloomberg) -- Billionaire Zygmunt Solorz-Zak agreed to buy Polkomtel SA, Poland’s second-largest mobile-phone company, for 15.1 billion zloty ($5.5 billion) in a record acquisition by a Polish investor.
Shareholders including Vodafone Group Plc signed a preliminary accord to sell the Warsaw-based company to Solorz- Zak late yesterday. The price excludes about 3 billion zloty of debt and dividend due to current owners. Solorz, who started Poland’s first private television network in 1992, three years after the fall of the Communist regime, will finance the deal with cash and debt, he said in a statement.
Polkomtel will help Solorz-Zak, 54, tap rising demand for bundled phone, Internet data and TV services in the most populous country among the European Union’s eastern members. Ranked by Forbes magazine as the second-wealthiest Pole, Solorz- Zak will use Polkomtel’s network to accelerate building a high- speed wireless system to take on France Telecom SA’s Orange.
“The biggest player on the market has just been created,” Pawel Puchalski, an analyst at Bank Zachodni WBK SA, said by phone, citing other Solorz-Zak assets including Cyfrowy Polsat SA, Poland’s second-largest TV network, and investment companies he is using to build Poland’s first fourth-generation network.
Polkomtel shareholders have been trying to sell their shares in the mobile-phone company since at least 2003. Besides Vodafone, the world’s No. 1 wireless carrier, they include oil refiner PKN Orlen SA, power utility PGE SA, copper producer KGHM Polska Miedz SA and coal trader Weglokoks SA.
The purchase price gives Polkomtel an enterprise value of 18.1 billion zloty, or 6.4 times the company’s 2010 earnings before interest, taxes, depreciation and amortization. Deals involving European wireless assets as targets fetched a median multiple of 9 times in the past five years, according to Bloomberg data.
Polkomtel reported Ebitda of 2.83 billion zloty last year. It forecast in April that 2011 earnings will be little changed.
“It looks like a reasonable price,” said Michal Marczak, an analyst at BRE Bank SA. “But it seems it doesn’t include control premium.”
Solorz-Zak, who also controls Invest-Bank SA, pension fund PTE Polsat SA and power utility ZE PAK SA, needs to win antitrust approval for the transaction by the end of this year, Polkomtel shareholders said. Forbes estimates his assets at 7.2 billion zloty.
Polkomtel plans to raise about $4.9 billion of loans and bonds to fund the buyout, two people with direct knowledge of the deal said today. The financing comprises senior and subordinated debt, they said.
Aero 2 Sp. z o.o. and Mobyland So. z o.o., both owned by Solorz-Zak, are the first Polish companies to start building a wireless Internet network based on long-term evolution, or LTE, technology. Aero will invest 1 billion zloty to cover all of Poland, Chief Executive Officer Adam Kurianski said yesterday.
Polkomtel, the operator of the Plus brand, has about 14 million customers for voice and Internet services. It competes with Deutsche Telekom AG’s Polska Telefonia Cyfrowa and France Telecom SA’s Telekomunikacja Polska SA unit, which is Poland’s biggest mobile-phone operator.
“Telekomunikacja and Deutsche Telekom will be left behind” as far as high-speed wireless Internet is concerned, said Piotr Janik, an analyst at KBC Securities NV.
Polkomtel’s current Polish owners, all state-controlled, may need to share the profits from the sale with the government after Treasury Minister Aleksander Grad said in April that passing “a significant share” of the sale proceeds to the government is the “right direction.”
Orlen is raising cash to invest in oil exploration and production. PGE is spending 38.9 billion zloty on projects including new power plants, while KGHM plans to invest a record 10.9 billion zloty this year.
For Vodafone, the deal completes CEO Vittorio Colao’s plan to unwind part of its portfolio in Europe and Asia. Vodafone said its 24 percent holding in Polkomtel will fetch about 920 million euros ($1.3 billion) in cash, which will go toward repaying debt.
Under Colao, Vodafone has sold a stake in China Mobile Ltd. and reduced its interests in Japan’s Softbank Corp. This month, it completed the sale of its 44 percent holding in French wireless operator SFR for 7.95 billion euros. Newbury, England- based Vodafone also has a 45 percent stake in Verizon Wireless, the largest U.S. wireless provider,
“This seems to be a happy ending,” said Robin Bienenstock, an analyst at Sanford C. Bernstein who has an “outperform” rating on Vodafone shares. “This would be the end of the cleanup of its portfolio.”
Vodafone slipped 0.8 percent to 164.05 pence at 9:23 a.m. in London.
Goldman Sachs Group Inc., ING Groep NV, Nomura Holdings Inc. and Rothschild advised Polkomtel’s sellers, while Trigon Dom Maklerski SA, Deutsche Bank AG and Credit Agricole SA advised Solorz-Zak.
Credit Agricole and Deutsche Bank AG managed the financing of deal for Solorz-Zak, while Societe Generale SA, Royal Bank of Scotland Group Plc and PKO Bank Polski SA also took part in funding, according to a statement from the billionaire.
--With assistance from Matthew Campbell, Jonathan Browning and Patricia Kuo in London. Editors: Kenneth Wong, Simon Thiel
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