The Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) acquisition of German cable operator Kabel Deutschland Holding AG (FRA:KD8) has been given the all clear by the European Commission. The deal, which is worth €7.7 billion, was originally announced in June. Shares in both firms were trading up a fraction on the news at time of writing.
Kabel Deutschland Holding AG (ETR:KD8) (FRA:KD8) (OTCMKTS:KBDHF) acquisition is not the only major deal that Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) is involved in at the moment. In recent months, the company agreed to sell its half of the Verizon Wireless joint venture to Verizon Communications Inc. (NYSE:VZ) for $130 billion.
Vodafone Kabel deal
The Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) acquisition of Kabel Deutschland Holding AG (ETR:KD8) (FRA:KD8) (OTCMKTS:KBDHF) will see the company extend its reach into Germany, one of the most important markets in Europe. Kabel Deutschland Holding operates wireless cable networks in the central European giant. The deal allows Vodafone to diversify beyond its traditional wireless business.
Kabel Deutchland uses its cable network to offer television and fixed line communication services. Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) already offers a wireless data and telephony service in Germany and it will use this deal in order to diversify its business in that country.
The European Commission said that it reviewed the effect of this deal on TV transmission and fixed line communication in Germany and competitiveness in the industry across the continent. On careful study it found that this deal represented no conflict or danger to the wider market.
Vodafone growth
With its hands on a huge amount of cash in the wake of the Verizon Communications Inc. (NYSE:VZ) deal, Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) has a huge range of options going forward. Most analysts expect the company to use the cash to extend its reach across Europe, and upgrade its outstanding networks across the continent.
The Kabel Deutschland Holding AG (ETR:KD8) (FRA:KD8) (OTCMKTS:KBDHF) acquisition was announced before the Verizon Wireless deal, so is not really part of the strategy in the wake of cash influx. It does, however, represent itself willingly as a part of the company’s overall strategy of diversification in Europe and expansion across the continent.
Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) shares have risen by around 35 percent this year as the company divests itself of assets and acquires new ones the market deems worthy. The stock is currently trading at 246 times its expected 2013 earnings.
