Vodafone Share Price Up as Liberty Global Bids for Kabel Deutschland

on Jun 18, 2013
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Liberty Global (NASDAQ:LBTYA), the media group controlled by John Malone, has made an indicative bid for Kabel Deutschland Holdings AG (FRA:KD8), which is pitting it against Vodafone Group Plc (LON:VOD) in a race for control of Germany’s largest cable operator. Kabel Deutschland confirmed yesterday, June 17, that it had received a preliminary proposal from Liberty but declined to provide details, including the possible valuation. According to unnamed sources quoted by the Financial Times, the potential offer was €85 a share, valuing the German company at about €7.5 billion.

Vodafone made an approach last week about a potential acquisition of Kabel as it seeks to add the cable operator’s fixed-line Internet and television services to its portfolio to generate fresh sources of revenue. The approach was spurned by Kabel as the company thought it indicated that the price Vodafone was willing to pay was too low. The UK mobile operator, which was reported yesterday to be considering an improved offer for Kabel, (Vodafone Share Price Up on News of Improved Bid Pending for Kabel Deutschland), has not yet made a fresh approach. Vodafone has not disclosed the value of its indicative offer but according to FT’s sources it is about €80 a share.

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The Vodafone share price has gained 0.77 percent to 184.10p in morning trading today on the London Stock Exchange. Boosted by news of Liberty Global’s offer, Kabel Deutschland share price has gained almost €3, or 3.55 percent, to €85.59 in Frankfurt as of 9:35 GMT. Vodafone’s initial offer propelled the German company’s stock above €82 last week.

**Bidding war**
Kabel Deutschland had indicated that Vodafone would have to offer “a significant premium” to its market value, according to one of the FT inside sources. It was suggested that the UK mobile operator planned to make an all-cash offer slightly above Kabel Deutschland’s recent market price of €82 a share. Now, the Liberty Global approach and today’s surge in the Kabel Deutschland share price are likely to make things more difficult for Vodafone.

Vodafone will probably offer as much as €90 a share following Liberty’s bid, Sanford C. Bernstein analyst Robin Bienenstock has said.
According to Heike Pauls, a Frankfurt-based analyst at Commerzbank AG, the Global Liberty preliminary proposal is “probably a tactical offer to push up the price and make it more difficult for Vodafone”. “Liberty is aware that the [German] cartel office would at best approve their deal under very tough conditions,” Bloomberg quoted Pauls as saying.

!m[Kabel Deutschland Share Price Rises above €85 ](/uploads/story/3163/thumbs/pic1_inline.png)
Liberty Global, which bought UK cable operator Virgin Media for $23.3bn earlier this year, entered the German market in 2010 with the acquisition of Unitymedia. The German anti-trust regulator forced Liberty Global to remove encryptions and open up contracts with housing associations to rivals when it added operator KabelBW in 2011 to form the country’s second-largest cable operator.
Kabel Deutschland’s new owner will gain 8.5 million paying households as well as and potential customers for bundled “quad play” packages (fixed line, mobile, Internet and television services) in the biggest telecommunications market in Europe.
**The Vodafone share price was 183.97p as of 10.14 GMT, 18.06.2013**
**The Kabel Deutschland price was €85.55 as of 10.14 GMT, 18.06.2013**

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