Liberty Global (LGI), owner of German cableco Unitymedia KabelBW, is working on an offer for counterpart Kabel Deutschland (KDG), according to a media report.
German weekly Manager Magazin claimed that LGI wants to beat Vodafone, which considered an…
Liberty Global (LGI), owner of German cableco Unitymedia KabelBW, is working on an offer for counterpart Kabel Deutschland (KDG), according to a media report.
German weekly Manager Magazin claimed that LGI wants to beat Vodafone, which considered an offer for KDG earlier in the year and is still said to be interested in the asset.
Commenting on the article a telecoms banker cautioned the report should be taken with a pinch of salt. He noted that LGI was currently busy with its US$23.3bn offer for Virgin Media in the UK, describing the integration of the asset as potentially challenging from an operational perspective. An additional acquisition of KDG, which would face serious antitrust issues, might be difficult to handle at the same time.
A German telecoms competition lawyer agreed that the German Federal Cartel Office (FCO) would closely scrutinise a merger of the top two players. However, he added that from an antitrust perspective such a transaction would resemble the earlier merger of Unitymedia and KabelBW rather than the recently-blocked acquisition of Tele Columbus by KDG.
The FCO cleared the KabelBW deal in 2011 after Unitymedia offered far-reaching remedies designed to foster competition in the cable markets. The two players had little regional overlaps but did compete on the feed-in market.
However, when KDG tried to acquire Tele Columbus the regulator was concerned about reduced competition in several East German regions where the two cablecos directly compete for end consumers. KDG offered to divest assets in those regions but abandoned plans for the takeover after the FCO indicated that the remedies were insufficient.
Liberty owner and chairman John Malone has said previously that he would like to acquire KDG. In an October 2012 interview with the now-defunct Financial Times Deutschland, he said that a merger of Unitymedia KabelBW and KDG would “make all the sense in the world,” if regulators would allow such a deal to proceed.
