Vodafone set for €10.7bn acquisition
Mobile phone giant Vodafone was today poised to buy Germany's biggest cable operator in a deal worth €10.7bn.
The acquisition, which could still be derailed by rival interest from US media group Liberty Global, will boost Vodafone's ability to offer consumers bundled packages of telecoms, broadband and television services.
The addition of Kabel Deutschland's 8.5 million connected households would leave Vodafone with 32.4 million mobile, five million broadband and 7.6 million direct TV customers in Germany.
Today's offer, which has been backed by Kabel Deutschland's management and supervisory boards, has a total value of €10.7bn when including €2.9bn of debt.
Vodafone's proposal is worth €87 a share and is thought to better an earlier rival bid from Liberty, owner of Virgin Media, at €85 a share.
Operators are increasingly attracted to the ''quad play'' business model, in which customers are able to subscribe to a package including TV, internet, landline and mobile services.
The British company has been expanding its presence in Germany recently, announcing a tie-up with Deutsche Telekom to offer pay-TV over high-speed broadband to its customers.
Germany has been one of Vodafone's better-performing markets in Europe.
Chief executive Vittorio Colao said: "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 in the home and workplace, and on the move."
The deal will provide Vodafone with cross-selling and cost-saving opportunities in what is already its single biggest market.
The company has also highlighted significant growth prospects in light of broadband and pay-TV penetration of 16% and 12% respectively.
The company added: "Leveraging Kabel Deutschland's high speed broadband and TV capabilities will provide Vodafone with the ability to offer premium unified communications services to consumers and businesses in Germany."
Vodafone shares were up by just under 1% today amid relief that the proposed purchase price is in line with market expectations.
In 2000, Vodafone agreed a €131.6bn all-share deal with Germany's Mannesmann in the largest corporate merger in history.
Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers, said the deal looked to have received the tentative thumbs-up from investors.
He added: "The price being offered comes as no surprise whilst Vodafone's customer offering is potentially being significantly increased."
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