As previously reported by Broadband TV News, the all-cash acquisition, which valued Multimedia at PLN3 billion (approximately $760 million), was first announced in October 2016. At that time, it was expected to close within 12 months, subject to regulatory approval.
However, Poland’s Office of Competition and Consumer Protection (UOKiK) raised competition concerns in November 2017, following the end of this 12-month period and after it had undertaken an analysis that proved the concentration could result in a significant restriction of competition in pay-TV and fixed-line services in 11 Polish cities.
Indeed, the UOKiK found that a combined UPC/Multimedia operation would have accounted for a market share of over 40% in each of the cities, and in some instances up to 80%.
The UOKiK said that having presented the results of its analysis to UPC the cable operator proposed several modifications to the transaction. However, none would have prevented the negative effects of the concentration.
In a statement, UPC Polska said: “We have withdrawn from the purchase of Multimedia Polska after we failed to reach an understanding with the sellers regarding the revised commercial terms of the transaction that would take into account the current regulatory and market conditions. We remain confident about the business prospects of our operations in Poland and we will take into account other opportunities for consolidation”.
Broadband TV News notes that it was expected the deal would have been approved following the imposition of a number of conditions by the UOKiK, as had been the case when UPC acquired Aster, then Poland’s fourth largest cable operator, in 2012.
It remains to be seen how Multimedia reacts to UPC’s withdrawal. In anticipation of its acquisition, it has already sold off its insurance and utility businesses as they were of no interest to UPC.