Vodafone is said to have matched Liberty Global’s (LGI’s) total €7.5bn (US$10bn) preliminary offer for Kabel Deutschland (KDG), while Liberty is reported to offer assets rather than cash as it believes this would ease antitrust concerns.
Vodafone…
Vodafone is said to have matched Liberty Global’s (LGI’s) total €7.5bn (US$10bn) preliminary offer for Kabel Deutschland (KDG), while Liberty is reported to offer assets rather than cash as it believes this would ease antitrust concerns.
Vodafone upped its offer for KDG from €80-€82 to €85 per share in an effort to convince the German cableco to enter negotiations, Bloomberg reported, citing unnamed people familiar with the bid.
According to the report, Vodafone and KDG are now in talks, with the former expected to present an official offer within weeks.
KDG’s shares spiked at €86.28 per share this morning but, by the time of writing, had dropped to €85.80.
Yesterday, KDG confirmed it had received a prelim offer from John Malone’s British-registered cable giant LGI for the company.
While details of the offer were not disclosed, LGI, which owns cableco UnityMedia KabelBW in Germany, is reported to have offered €85 per share for KDG, valuing the company at €7.5bn.
Analysts have speculated that the eventual buyer may have to pay €90 per share for KDG.
Meanwhile, two people familiar with LGI’s offer told the Financial Times the cableco plans to offer assets instead of cash for KDG in an effort to offset opposition from the German antitrust regulator.
There has been much speculation that Germany’s Federal Cartel Office (FCO) would not allow a merger between UnityMedia and KDG, the nation’s two largest cablecos, particularly in light of the fact it blocked KDG’s planned takeover of smaller rival Tele Columbus earlier this year.
But, according to the FT report, Liberty believes it can allay such concerns by injecting UnityMedia assets into KDG and keeping the latter as a listed company. This would mean LGI would have significant influence, but not a majority stake at the holding company level.
The report cited one unnamed source familiar with the matter as saying Liberty has been in contact with German regulators about its bid and, while aware of challenges, is confident it can close a deal.
While LGI has confirmed the accuracy of KDG’s statement on its preliminary offer yesterday, it has declined to provide any further details.
KDG and Vodafone have also declined to comment further.
Generally, observers have predicted Vodafone would not encounter insurmountable hurdles in its bid for KDG, although it operates throughout Germany as a mobile operator.
However, a Germany-based former cableco executive said that a Vodafone-KDG merger could also attract close scrutiny from the regulator as it would effectively see two major telecoms players join forces.
Liberty could argue to the FCO that Unitymedia and KDG compete directly in only a small percentage of local markets, he suggested.
