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STC Group considers acquisition of United Group

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Saudi Arabia’s telecommunications giant STC Group is reportedly exploring the possibility of acquiring United Group, a telecommunications and cable operator, according to three sources familiar with the matter, as reported by Reuters.

The British firm BC Partners, which acquired United Group from KKR in 2019, is said to be collaborating with advisors on the potential deal, according to two of the individuals.

STC has initiated preliminary discussions regarding the transaction, which are still in the early stages and may not necessarily result in a formal takeover offer, stated the third source.

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The potential deal could value United Group at approximately eight billion euros, including debt, as revealed by one of Reuters’ sources who chose to remain anonymous.

Both STC and BC Partners declined to comment on the speculations.

Should STC proceed with the acquisition, it would mark a significant expansion into the European telecommunications sector for the Saudi telecom operator. Last year, STC acquired a 4.9 percent stake in the Spanish firm Telefonica, with plans to potentially increase its stake to nearly ten percent.

Additionally, STC’s subsidiary TAWAL acquired United Group’s telecommunications tower assets in Bulgaria, Croatia, and Slovenia in the previous year, according to Reuters.

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BC Partners is reportedly exploring various strategies to maximize the sale’s value, including potentially splitting the company by regional segments, as revealed by two of the sources.

The potential sale has also attracted interest from infrastructure investment funds looking to invest in individual countries, such as Greece, Croatia, and Slovenia, according to one of the sources.

In April, Abu Dhabi-based Emirates Telecommunications announced that it was assessing “relevant market opportunities” but had not entered into negotiations or agreements regarding the acquisition of United Group. This announcement followed media reports suggesting a possible takeover of the European telecommunications group.

United Group’s revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by seven percent to 2.7 billion euros. The group’s capital structure includes €4 billion of senior secured bonds issued by United Group and €300 million of cash-in-kind bonds issued by its parent company Summer Bidco, as per a note published by S&P in January.

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