Monday 20 November 2017

Liberty joins Vodafone in race for Kabel takeover

Paul Sandle and Sophie Sassard

Liberty Global is going up against Vodafone in a takeover battle for Germany's Kabel Deutschland.

US-based Liberty is controlled by Irish American tycoon John Malone who snapped up an €8m castle in Co Wicklow earlier this year.

The company reportedly joined the race for KDG yesterday with an €85 a share offer, according to a person familiar with the matter, days after the British mobile company said it was in talks about a deal.

Vodafone wants to buy the cable company so that it can offer TV, fixed line and broadband to more of its mobile customers, while Liberty Global wants more consolidation in one of its best performing markets. Vodafone offered about €81-82 a share in cash, sources said last week.

Shares in Kabel Deutschland were trading 3.8pc higher at €85.60 each yesterday, valuing the group's equity at €7.56bn.

A Liberty Global deal would be closely scrutinised by German anti-trust authorities, a hurdle recognised by Liberty Global's chief financial officer Charles Bracken last week. That is because Liberty already owns Unity Media, Germany's second biggest cable operator


Bracken told a Goldman Sachs cable conference on June 12 that while the industrial logic for consolidation in Germany was compelling, regulatory opposition remained a significant barrier to any deal in the near future, the bank said in a note.

Germany's competition regulator in February blocked Kabel Deutschland's bid to take over smaller Berlin-based cable group Telecolumbus for €618m.

A source familiar with the situation said Liberty has already talked to German antitrust office to discuss the deal, but declined to elaborate.

Liberty Global customers in Germany are in the densely populated German state of North Rhine-Westphalia as well as in Hesse and Baden-Wuerttemberg, while Kabel Deutschland is active in the rest of Germany.

Liberty Global's Unity Media Kabel BW and Kabel Deutschland hold about 15pc of the German broadband market. With cheaper prices and higher speeds, they have been winning customers from Deutsche Telekom, which still has more than 40pc of the market.

Vodafone holds roughly 12pc of the German broadband market, and rents wholesale capacity from Deutsche Telekom to provide the service to customers.

A source familiar with the situation said Kabel Deutschland had requested binding bids in two weeks. (Reuters)

Irish Independent

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