John Malone’s Liberty Global Joins Bidding for German Cable Company

Having acquired Britain’s largest cable operator, Virgin Media, John Malone‘s Liberty Global has submitted a preliminary bid for German cable giant Kabel Deutschland.

The German company on Tuesday confirmed the offer, which was first reported by the Financial Times. The paper said the bid was worth about $10 billion (€7.5 billion).

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Given its presence in Germany, Liberty Global has in recent months been expected to go after Kabel Deutschland, which would help to roughly double the company’s reach in the country. Liberty Global was particularly expected to join the bidding after a recent offer for Kabel Deutschland from telecom company Vodafone, which was reported to be worth $108 to $110 (€81 to €82) per share. Liberty Global’s offer is worth about $114 (€85) per share.

“Given the precedent set by [its] KBW acquisition in 2011, we think any move by Liberty Global for Kabel Deutschland could be subject to a lengthy regulatory review — up to one year,” said UBS analyst Polo Tang. “The complementary nature of the Liberty Global and Kabel footprint in Germany means synergies could be less than $135 million [€100 million] per year.”

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ISI Media analyst Vijay Jayant said a deal could be a good thing for Liberty Global. “It would be a nice asset to have due to the attractive upside in the German broadband market — Liberty Global has 36 percent broadband penetration there, while Kabel Deutschland only has 24 percent,” he said. “But there could be tough regulatory hurdles to closure.”

The reported price tag would initially make a deal dilutive to Liberty Global but would be “additive to the three-year EBITDA growth profile,” Jayant said in reiterating his “strong buy” rating on Liberty Global’s stock.

Liberty Global’s Virgin Media deal was valued at $23.3 billion. Liberty Global could not be immediately reached for comment.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai