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UPC bails from $2.8B deal
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May 22, 2000: 4:02 a.m. ET
Cable firm's collapsing share price ends purchase of broadcaster SBS
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LONDON (CNNfn) - Amsterdam-based cable operator United Pan-Europe Communications (UPC) canceled its $2.8 billion acquisition of SBS Broadcasting Monday, blaming the collapsing price of its own stock for scuppering the deal.
UPC Chairman Mark Schneider attributed "continuing turmoil in the financial markets" for the "reluctant" decision not to proceed with the takeover. "Given current share price levels it is simply not practical to complete the transaction," he said in a statement.
At the time of the March offer, UPC stock was worth around  83.3 (adjusted for a subsequent three-for-one stock split). Early Monday the shares traded at 21.25 in Amsterdam, down a further 0.7 percent on the day.
The firm offered $2.8 billion in cash and stock for SBS. At the time the deal was worth $85.14 per SBS share, a 49 percent premium to the price of SBS stock before the offer. SBS (SBTV: Research, Estimates) fell 18 percent Friday to $47 on concern the deal could unravel.
Schneider stressed that UPC would remain Luxembourg-based SBS's largest shareholder with just under a quarter of the firm's capital, and said the two firms would continue to work closely together.
SBS chairman and chief executive Harry Sloan said: "Given SBS's strong operating performance and continuing growth prospects, we simply cannot entertain anything less than a superior transaction for our shareholders."
SBS is a television and radio broadcaster with activities in 10 European countries. UPC has built up, mainly through acquisitions, Europe's largest broadband cable network, with some 7 million subscribers. It is listed in Amsterdam and majority owned by U.S. firm UnitedGlobalCom Inc. (UCOMA: Research, Estimates).
Chello IPO presses ahead
Separately Monday, a senior executive at chello, UPC's Internet access arm, told CNN the firm would plow ahead with its planned initial public offering, despite the apparently deteriorating outlook for Internet flotations in Europe.
"We're pressing ahead with the flotation," said Roger Lynch, chello's chief executive, noting that the investor roadshow would close at the end of the month ahead of listings in Amsterdam and on the Nasdaq in June. He stressed that chello was exciting investor interest because the firm has "networks and subscribers who pay (us) money".
UPC on Friday set the range for chello's IPO price below analysts' initial expectations of what the company could be worth. The price range of 13 to 17 a share values chello at up to 4.6 billion.
Sentiment regarding Internet IPOs in Europe is already fragile because of a number of very disappointing debuts. Dutch ISP World Online currently trades at a fraction of its 43 issue price, and is mired in controversy and legal recriminations. Last week, high-profile online retailer Boo.com folded, after blowing $130 million in its short life span. Efforts by liquidators to sell the company have failed to flush out a buyer so far. 
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UPC
SBS Broadcasting
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