The United States broadband company Liberty Global has announced a surprise deal to take over Switzerland's largest cable operator Cablecom.
The move comes only a day after Cablecom announced plans to go public on the SWX stock exchange in Zurich on October 13.
A spokesman at the bourse confirmed that the initial public offering (IPO) had been cancelled.
Liberty Global, based in Denver, Colorado, said it was buying 100 per cent of Cablecom for SFr2.8 billion ($2.2 billion) in a transaction expected to close in October.
The purchase price is below Cablecom's IPO price range that valued the company at up to SFr3.5 billion.
"This transaction represents the culmination of a tremendous turnaround of the company in just four years," commented Cablecom chief executive Bruno Claude.
"The outcome announced today will deliver a strong number two telecommunications market position in Switzerland, which is our long-term objective.
"With the backing of Liberty Global, Cablecom benefits significantly from being part of a wider media family both in terms of content acquisition and access to leading-edge technologies at lower cost," he added.
Liberty Global's president and chief executive, Mike Fries, was also in an upbeat mood.
"Continued expansion of our footprint in Europe is a core strategic objective. Cablecom is a world-class operation with over two million video, voice and data subscribers in one of Europe's most attractive telecommunications markets," he commented.
"With 80 per cent video penetration, limited satellite and data competition, and strong operating cash flow, Cablecom fits perfectly into our long-range growth plans.
"Upon completion, we will be the largest broadband cable operator in 11 of our 14 European markets," he added.
The company said in a statement that the acquisition would be largely debt-financed.
Cablecom, which is a fast-growing competitor to Switzerland's leading telecoms operator Swisscom, announced on Thursday that it would offer shares in the IPO in a range of SFr57-70, which would raise more than SFr2 million.
Cablecom's CEO Claude said it was fair to say that the company had been "very much focusing" on an IPO and that talks with Liberty had been an ongoing process.
"We engaged in the IPO process and we were comfortable with the demand from the market but Liberty came back to us last night with an offer that was very strong.
"The board was put in front of the certainty of a cash offer versus the risk of market conditions," he said.
Cablecom spokesman Stephan Howeg denied that the IPO move had been made to put Liberty Global under pressure.
Heavily debt-laden Cablecom, which has yet to make a profit after being spun off from British cable operator NTL, refinanced its bank debt earlier this year.
The takeover is to be funded in part by Cablecom adding another €550 million (SFr856 million) to its already heavy debt burden.
"It is our concern but we are comfortable with the way Liberty will finance this acquisition," Claude commented.
Cablecom is majority owned by Apollo Management, Goldman Sachs Capital and TowerBrook Capital Partners, which together hold 53 per cent. Several banks own the remainder of the equity.
swissinfo with agencies
In 2004 Liberty Global's networks are present in approximately 23.5 million homes.
They serve 10.7 million video subscribers, 2.5 million broadband internet subscribers and 1.7 million telephone subscribers.
Cablecom had sales of SFr406.2 million for the first six months of the year.
The company employs 1,715 people and has 150,000 customers for its phone services just one year after their launch.
Based in Denver, Colorado, Liberty Global had about 11,800 employees at the end of 2004.
Through its subsidiaries and affiliates, Liberty Global is the largest broadband cable operator outside the US in terms of subscribers.
Liberty Global is present in 13 European countries: Austria, Belgium, France, Hungary, Ireland, Norway, Poland, the Czech Republic, the Netherlands, Romania, Slovakia, Slovenia and Sweden.