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* Cable network deal creates player reaching 3.7 mln homes
* Tele Columbus to fund deal partially with cap hike
* Tele Columbus seeks 240 mln eur proceeds from cap hike (Adds deal detail on debt levels after close of deal)
FRANKFURT, Sept 13 (Reuters) - Tele Columbus AG Germany's third-largest cable network operator, said on Sundayit has agreed to buy rival pepcom GmbH to create a combinedcompany reaching 3.7 million homes, in a deal valued at 608million euros ($689 million), including debt.
Tele Columbus currently provides its internet, telephonyand Premium TV services to 2.8 million households in Berlin,Brandenburg, Saxony, Saxony-Anhalt and Thuringia while pepcom'scustomers are in Bavaria and Hesse, in the cities of Munich,Nuremberg and Frankfurt am Main.
Tele Columbus Chief Executive Ronny Verheist said, "Infuture we intend to continue to pursue economically andstrategically attractive growth opportunities to driveconsolidation."
Tele Columbus's two biggest rivals are Liberty Global's Unitymedia Kabel BW and Vodafone's KabelDeutschland.
Tele Columbus said it expected cost synergies of 13 millioneuros and investment synergies of 2 million euros to be realisedwithin 24 months of completing the deal.
The closing of the acquisition to buy Germany's fourthlargest cable network operator is subject to shareholdersapproving a proposed rights issue of shares to raise 240 millioneuros, the company said.
An extraordinary shareholders' meeting (EGM) is to be heldon September 14, 2015.
In July Reuters reported that Tele Columbus was the frontrunner in an auction for pepcom in a deal expected to be wortharound 700 million euros.
Tele Columbus said that after repayment of the equity bridgefinancing its leverage is expected to remain at around fivetimes normalised earnings before interest tax debt andamortization (EBITDA), although it may be lower depending on thesize of the rights issue and other equity measures.
Excluding net debt and the 30 percent minority participationin KMS Kabelfernsehen München ServiCenter GmbH & Co, the equityvalue of the deal was approximately 505 million euros, thecompany said. ($1 = 0.8821 euros) (Reporting by Edward Taylor; Editing by Greg Mahlich)
