Vodafone Group Plc (LON:VOD) (NASDAQ:VOD) offered €7.7 billion ($10.1 billion) for Germany’s largest cable company Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF) .
Vodafone’s Offer:
The world’s second largest mobile network operator Vodafone Group Plc (LON:VOD) (NASDAQ:VOD) offered to buy Germany’s cable operator at €85 a share, to bolster its ability to offer bundled deals of telecoms, broadband and TV services.
The sweetened offer from Vodafone tops the rival indicative proposal of close to €85 a share from Liberty Global PLC (NASDAQ:LBTYA) (NASDAQ:LBTYB) (NASDAQ:LBTYK). Earlier the UK-based mobile operator Vodafone Group Plc (LON:VOD) (NASDAQ:VOD) offered €80 per share.
Last week, Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF), the largest cable operator in Germany confirmed that it received an initial takeover offer from Liberty Global, the U.S. cable company controlled by John Malone.
The British Group Vodafone Group Plc (LON:VOD) (NASDAQ:VOD)’s all-cash offer is considered preferable to a more complicated proposal from Liberty Global PLC (NASDAQ:LBTYA) (NASDAQ:LBTYB) (NASDAQ:LBTYK) that involved injection of Liberty Global’s German cable assets as well as cash. The improved offer from Vodafone includes an outstanding dividend payable to Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF) shareholders.
Increasing Interest in European Cable Assets
Vodafone’s offer comes amid increasing interest shown in European cable assets. Recently, Liberty Global PLC (NASDAQ:LBTYA) (NASDAQ:LBTYB) (NASDAQ:LBTYK) concluded a $24 billion stock-and-cash deal to buy U.K’s cable and Internet provider Virgin Media Inc. (NASDAQ:VMED).
According to German takeover law, Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF) shareholders will have four to ten weeks to tender their shares, in response to Vodafone Group Plc (LON:VOD) (NASDAQ:VOD)’s formal bid. Besides, Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF)’s management has around two weeks to make a recommendation.
Enhanced Footprint
Vodafone is the second largest mobile network operator in the world, next only to China Mobile Ltd (HKG:0941). Liberty Global PLC (NASDAQ:LBTYA) (NASDAQ:LBTYB) (NASDAQ:LBTYK)’s broadband networks has presence in over a dozen countries.
Vodafone Group Plc (LON:VOD) (NASDAQ:VOD) is expected to have access to Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF)’s 8.5 million connected households
According to James Barford, a London-based analyst at Enders Analysis, Vodafone Group Plc (LON:VOD) (NASDAQ:VOD)’s deal creates a strong number two triple play operator, increasing competitive pressure on Deutsche Telecom and Sky Deutschland. The analyst anticipates the proposed deal to acquire Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF) could help Vodafone to reinvigorate its struggling fixed-line operation.
Anticipating revised offer from Vodafone Group Plc (LON:VOD) (NASDAQ:VOD), the stock price of the German company, Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) (OTCMKTS:KBDHF) rose to close at €85 towards the end of the week.
