Macquarie Buys Stake in South Korean Cable Operator

Macquarie Bank will buy 30% of South Korea's No. 2 cable TV operator from Goldman Sachs, reportedly worth $970 million, and is in talks for the remaining stake, two sources with knowledge of the deal told Reuters on Wednesday.

The Australian bank had competed with private equity fund MBK Partners for the 30% stake before they turned allies to jointly buy the rest of unlisted C&M.

"Macquarie signed the deal for a 30% stake owned by Goldman," one of the sources said by telephone, declining to be named. "Now Macquarie and MBK are in negotiations to jointly buy the remaining 70%. But the sellers have not confirmed whether they will sell all of their shares."

Macquarie and Goldman declined to comment, while C&M and MBK were not immediately available for comment.

C&M is the largest cable TV operator in the greater Seoul metropolitan area with 2 million subscribers. Goldman became its second-largest shareholder after buying a 30% stake for 140 billion won in 2004.

C&M chairman Lee Min-joo and other individual shareholders own 70%.

MBK, created by former Carlyle Group Asia head Michael Kim, had offered 3 trillion won (US$3.2 billion) to buy all of the multi-system cable TV operator from the start, while Macquarie had pursued only a 30% stake from Goldman.

MBK had offered 2 trillion won in debt and 1 trillion won in equity, another source has said.

Top domestic banks, including Kookmin Bank and Shinhan Financial Group, would extend loans to MBK once a deal was finalized, banking officials said.

South Korea's National Pension Service, which had turned down MBK's proposal to join as a financial investor, said on Wednesday it is unlikely to participate in the deal.

Earnings at cable TV operators, which have a monopoly in their business areas, are expected to rise with stronger demand as South Korea prepares for digital TV services and premium services boasting a bigger offering of channels.

Macquarie is the biggest foreign investment bank in South Korea, and MBK is the most active homegrown fund in the country.