Estonia’s leading cable operator Starman is to acquire a 100% stake in its Lithuanian counterpart Cgates for €56.3 million.

At the same time, East Capital Explorer, the majority owner of Starman, will in connection with the deal, and for an investment of €23 million, increase its stake in Starman from 51% to 62%.

Cgates is Lithuania’s leading cable TV and broadband provider, with a network covering 300,000 households in 12 cities. It has around 125,000 pay-TV and 70,000 internet RGUs and its revenues in 2013 amounted to €15.2 million, with an EBITDA margin of 44.7%.

Meanwhile, Starman’s cable network covers 52% of households in Estonia and its DTT network 97% of households. Its revenues in 2013 amounted to €30.2 million, with an EBITDA margin of 48.5%. The fair value of East Capital Explorer’s holding in Starman prior to the latest deal amounted to €34 million, or 11.4% of the total Net Asset Value.

Commenting on the deal, which is subject to approval from the competition authority in Lithuania and is expected to be completed in Q1 2015, ia Jurke, CEO of East Capital Explorer, said: “The add-on investment in Starman, which now becomes our largest direct investment, is a further step in our strategic path towards a more streamlined portfolio of private equity and real estate holdings. As a stand-alone investment, Starman has constantly exceeded expectations regarding profitability and cash flow. Ever since we acquired the company in May 2013 we have looked at opportunities to create additional value through taking an active role in consolidation of the Baltic cable TV market. We are confident that Cgates is the right partner for Starman”.

Gert Tiivas, chairman of Starman and head of private equity in the Baltics, East Capital, added: “Cgates is the best managed telecommunications company in Lithuania with a strong market position, stable performance and good profitability. Together, Cgates and Starman will create the only truly pan-Baltic cable TV operator