Can Vodafone Acquire Germany’s Largest Cable Provider?
Vodafone (NASDAQ:VOD) is upping its bid for Germany’s number-one cable provider, Kabel Deutschland, looking to match or beat the current offer placed by rival Liberty Global (NASDAQ:LBTYA) earlier this week.
Liberty Global, owner of Unity Media, Germany’s second-largest cable provider, made an offer on Tuesday that would value Kabel at 7.5 billion euros ($10 billion). Vodafone, which placed an earlier bid valuing the company at 7.2 billion euros ($9.6 billion), is now considering matching or beating Liberty Global’s offer, according to Reuters.
“Vodafone has told Kabel Deutschland they are working on an improved bid. There is still nothing concrete on the table,” said one of the sources familiar with Vodafone’s thinking.
What are the benefits for each company in an acquisition of Kabel? For Vodafone, it presents a medium by which it can offer television, fixed line, and broadband services to more of its wireless customers. For Liberty, combining the two biggest cable providing companies in Germany is too good an opportunity to pass up.
However, the general consensus is that if Vodafone puts together another offer — one that either matches or beats Liberty’s — they will have the upper hand in acquiring the cable provider. For one, Vodafone’s bid would likely be in all cash, whereas Liberty’s bid is largely made up of shares, similar to when the company spent $23.5 billion in a takeover of Virgin Media in February.
According to the Telegraph, another concern with Liberty’s bid is the antitrust review that would undoubtedly occur if the two biggest cable providers in Germany were to join forces.
“Shareholders of Kabel Deutschland would have to consider the possibility that a potential Liberty offer faces a lengthy regulatory review with an uncertain outcome,” analysts at Jefferies said in a note on Tuesday.
While this bidding war certainly seems far from over, it appears Vodafone has the inside track on acquiring Kabel, should it choose to pursue it.
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