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Home - Top News
June 30, 2011 6:42 PM

Solorz-Zak Buys Polkomtel for $5.5 Billion in Record Polish Deal

July 1 (Bloomberg) -- Billionaire Zygmunt Solorz-Zak agreed to buy Polkomtel SA, Poland's second-largest mobile-phone company, for 15.1 billion zloty ($5.5 billion) in a record acquisition by a Polish investor.

Shareholders including Vodafone Group Plc signed a preliminary accord to sell the Warsaw-based company to Solorz- Zak, according to statements late yesterday. The price excludes about 3 billion zloty of debt and dividend due to current owners. Solorz, who earlier this year raised more than 3 billion zloty by selling stakes in his companies, will finance the deal with his own cash and debt, he said in a statement.

Polkomtel will help Solorz-Zak, who also controls television network Cyfrowy Polsat SA, tap rising demand for bundled phone, Internet data and TV services. Solorz-Zak, 54 and the second-wealthiest Pole according to Forbes magazine, will use Polkomtel's network to accelerate building a high speed wireless system. The owners of the phone company had tried to sell their shares since at least 2003.

'This seems to be a happy ending,' said Robin Bienenstock, an analyst at Sanford C. Bernstein who has an 'outperform' rating on Vodafone shares. For Vodafone, the world's largest mobile-phone company, 'this would be the end of the cleanup of its portfolio.'

Demand Surge

Polkomtel shareholders also include oil refiner PKN Orlen SA, power utility PGE SA and copper producer KGHM Polska Miedz SA. Coal trader Weglokoks SA also agreed to sell its stake. The Polish owners, all state-controlled, may need to share the profits from the sale with the government after Treasury Minister Aleksander Grad said in April that passing 'a significant share' of the sale proceeds to the government is the 'right direction.'

Solorz-Zak, who also controls Invest-Bank SA, pension fund PTE Polsat SA and power utility ZE PAK Sal, needs to win antitrust approval for the transaction by the end of this year, Polkomtel shareholders said.

At the last stage of the transaction, Solorz-Zak competed with offers from private-equity firm Apax Partners LLP and Telenor ASA, the Nordic region's largest phone company, two people with knowledge of the matter have said.

Polkomtel reported earnings before interest, taxes, depreciation, and amortization of 2.83 billion zloty in 2010. It forecast in April that 2011 earnings will be little changed.

Deal Multiple

The purchase price gives Polkomtel an enterprise value of 18.1 billion zloty, or 6.4 times the company's 2010 Ebitda. European wireless assets fetched a median multiple of about 9 times over the past five years, according to Bloomberg data.

Polkomtel, the operator of the Plus brand, has about 14 million customers for voice and Internet services in Poland. It competes with Deutsche Telekom AG's Polska Telefonia Cyfrowa and France Telecom SA's Orange unit, which is the country's biggest mobile-phone operator.

Goldman Sachs Group Inc., ING Groep NV, Nomura Holdings Inc. and Rothschild advised the sellers, while Trigon Dom Maklerski SA, Deutsche Bank AG and Credit Agricole advised Solorz-Zak.

For Vodafone, the deal completes CEO Vittorio Colao's plan to unwind part of its portfolio in Europe and Asia. Vodafone has sold a stake in China Mobile Ltd. and reduced its interests in Japan's Softbank Corp. This month, it completed the sale of its 44 percent holding in French wireless operator SFR for 7.95 billion euros.

Cutting Debt

In a statement, Vodafone said its 24 percent holding in Polkomtel will fetch about 920 million euros ($1.3 billion) in cash, which will go toward repaying debt.

Newbury, England-based Vodafone has retained its 45 percent stake in Verizon Wireless, the largest U.S. wireless provider, even after failing to receive a dividend from the company since 2005, while partner Verizon Communications Inc. focuses on paying down debt.

Credit Agricole SA and Deutsche Bank AG managed the financing of the acquisition for Solorz-Zak, while Societe Generale SA, Royal Bank of Scotland Group Plc and PKO Bank Polski SA also took part in funding, according a statement from the billionaire.

To contact the editor responsible for this story: Kenneth Wong at

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