Skip to main content

Vodafone agrees $10 billion Kabel Deutschland deal

Vodafone ( id="symbol_VOD.L_0">VOD.L) has agreed to buy Germany's largest cable operator Kabel Deutschland ( id="symbol_KD8Gn.DEKD8Gn.DE) for 7.7 billion euros ($10 billion), betting on TV and fixed-line services in its biggest deal since 2007.

_1">

Announcing its second major acquisition for a European fixed-line network in 12 months, Vodafone said it would pay 87 euros ($110) per share for the group to enable it to offer more competitive packages with TV, fixed-line and broadband services to its mobile customers.

The world's second-largest mobile operator, following up its acquisition of Cable & Wireless Worldwide, is however paying a rich price for the German firm and its 8.5 million homes, which it considered buying before it went public in March 2010 at 22 euros per share.

One trader who asked not to be named said the offer, Vodafone's biggest since a 2007 Indian acquisition, valued Kabel Deutschland at 12 times enterprise value against 2013 core earnings, a 35 percent premium to the sector.

However, this falls to 8.5 times when taking into consideration the synergies Vodafone expects to extract. "We believe this is a decent deal for Vodafone," the trader said.

 

Shares in the group had been trading at 63 euros before Vodafone's initial interest was reported in February.

The UK-based company was forced to raise its offer in the last week after John Malone's Liberty Global ( id="symbol_LBTYA.O_2">LBTYA.O) entered the fray, forcing it to up the stakes or face losing ground to Liberty's own cable operator Unity Media and to Deutsche Telekom ( id="symbol_DTEGn.DE_3">DTEGn.DE).

"German consumer and business demand for fast broadband and data services continues to grow substantially, as customers increasingly access TV, fixed and mobile broadband services from multiple devices," Vodafone Chief Executive Vittorio Colao said.

"The combination of Vodafone Germany and Kabel Deutschland will greatly enhance our offerings in response to those needs."

The board of Kabel Deutschland said it expected to recommend the offer to its shareholders, although some analysts thought Liberty Global could still return with a counter offer even though it would likely face high regulatory barriers.

BIGGER CHANCE

"The Vodafone offer has a bigger chance of succeeding over any potential offer from Liberty Global, as it will be in cash and will face no antitrust hurdles," said a shareholder, who holds both Vodafone and Kabel Deutschland.

The investor declined to be named as it is his fund's policy not to comment in public about separate stocks.

"There remains the possibility of a counter-offer from Liberty Global, however we believe Liberty's appetite may be tempered by the significant regulatory risks of such a transaction," analysts at JPMorgan said in a note.

The combination of Vodafone and Kabel Deutschland will result in a group with 11.5 billion euros of revenue in Germany, from 32.4 million mobile customers, 5 million broadband and 7.6 million TV customers.

Vodafone said it expected synergies from the deal to exceed an annual 300 million euros before integration costs, by the fourth full-year post completion.

_0">

Vodafone also believes there is the potential for revenue synergies of 1.5 billion euros from cross-selling products and improved customer loyalty.

_1">

Quad-play services have caught on rapidly in markets like France and Spain, where they have been pioneered by major local companies France Telecom ( id="symbol_FTE.PA_4">FTE.PA) and Telefonica ( id="symbol_TEF.MC_5">TEF.MC).

_2">

Germany is still some way behind and buying Kabel Deutschland could allow Vodafone to steal a march on Deutsche Telekom, the traditional fixed-line group.

_3">

Cable operators across Europe including Liberty Global, Ziggo ( id="symbol_ZIGGO.AS_6">ZIGGO.AS), Kabel Deutschland and Virgin Media VMED.O have been winning customers and investors with their offer of a combined package of TV, broadband and telephony services.

_4">

Their cable lines, designed to deliver TV to homes, have been upgraded to carry voice calls and Internet at speeds often five times faster than competing services from the telcos.

_5">

Bundled offers have been snapped up by customers wanting to watch television on an array of devices from TVs, laptops and tablets.

_6">

Vodafone shares were up 1.4 percent in early trading and Kabel Deutschland was up 1.8 percent at 86 euros. ($1 = 0.7612 euros)

_7">

(Editing by Paul Sandle and David Holmes)

_8">

Popular posts from this blog

Study Abroad USA, College of Charleston, Popular Courses, Alumni

Thinking for Study Abroad USA. School of Charleston, the wonderful grounds is situated in the actual middle of a verifiable city - Charleston. Get snatched up by the wonderful and customary engineering, beautiful pathways, or look at the advanced steel and glass building which houses the School of Business. The grounds additionally gives students simple admittance to a few major tech organizations like Amazon's CreateSpace, Google, TwitPic, and so on. The school offers students nearby as well as off-grounds convenience going from completely outfitted home lobbies to memorable homes. It is prepared to offer different types of assistance and facilities like clubs, associations, sporting exercises, support administrations, etc. To put it plainly, the school grounds is rising with energy and there will never be a dull second for students at the College of Charleston. Concentrate on Abroad USA is improving and remunerating for your future. The energetic grounds likewise houses various

Best MBA Online Colleges in the USA

“Opportunities never open, instead we create them for us”. Beginning with this amazing saying, let’s unbox today’s knowledge. Love Business and marketing? Want to make a high-paid career in business administration? Well, if yes, then mate, we have got you something amazing to do!   We all imagine an effortless future with a cozy house and a laptop. Well, well! You can make this happen. Today, with this guide, we will be exploring some of the top-notch online MBA universities and institutes in the USA. Let’s get started! Why learn Online MBA from the USA? Access to More Options This online era has given a second chance to children who want to reflect on their careers while managing their hectic schedules. In this, the internet has played a very crucial in rejuvenating schools, institutes, and colleges to give the best education to students across the globe. Graduating with Less Debt Regular classes from high reputed institutes often charge heavy tuition fees. However onl

Sickening moment maskless 'Karen' COUGHS in the face of grocery store customer, then claims she doesn't have to wear a mask because she 'isn't sick'

A woman was captured on camera following a customer through a supermarket as she coughs on her after claiming she does not need a mask because she is not sick.  Video of the incident, which has garnered hundreds of thousands of views on Twitter alone, allegedly took place in a Su per Saver in Lincoln, Nebraska according to Twitter user @davenewworld_2. In it, an unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of the customer recording her. Scroll down for video An unidentified woman was captured dramatically coughing as she smiles saying 'Excuse me! I'm coming through' in the direction of a woman recording her A woman was captured on camera following a customer as she coughs on her in a supermarket without a mask on claiming she does not need one because she is not sick @chaiteabugz #karen #covid #karens #karensgonewild #karensalert #masks we were just wearing a mask at the store. ¿ o