Vodafone in $10.1 Billion Deal for German Cable Giant Kabel Deutschland

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Liberty Global chairman John Malone

UPDATED: The U.K. telecom firm's tender offer has the support of the largest German cable company, which has also been eyed by John Malone's Liberty Global.

LONDON - U.K. telecom giant Vodafone Group on Monday said that Kabel Deutschland, Germany's largest cable operator, has agreed to a $10.1 billion (€7.7 billion) acquisition offer.

John Malone's Liberty Global, Europe's largest cable company and a big player in Germany, had also been eyeing a possible Kabel Deutschland deal, but had signaled a slightly lower price.

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The Vodafone agreement with Kabel Deutschland signaled the telecom firm's willingness to take on Liberty Global. It wasn't immediately clear if Liberty Global could make a late alternative takeover bid. Liberty Global only recently completed its $24 billion acquisition of U.K. cable giant Virgin Media.

The price tag of the Vodafone deal represents a premium of 37 percent over Kabel Deutschland's stock closing price on Feb. 12, the last trading day before takeover speculation first emerged. It amounts to a premium of 14 percent when looking at the weighted three-month average stock price.

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Vodafone said its deal would take the form of a voluntary public tender offer for Kabel Deutschland's stock valued at $110.79 (€84.50) per share in cash plus payment of a dividend planned by Kabel Deutschland. The total value amounts to $114 (€87), compared to the $111 (€85) believed to have been offered by Liberty Global.

"The management board and supervisory board of Kabel Deutschland Holding AG welcome the announced offer," the companies said. "They believe a future combination with Vodafone promises highly attractive long-term benefits for both companies, their customers, workforces and shareholders." They added: "Alongside revenue synergies, the combination should also deliver efficiency gains in areas such as the use of network infrastructure and procurement."

The boards of both companies have already signed a combination agreement. Under German takeover rules, Kabel Deutschland shareholders have four to 10 weeks to tender their shares.

"Kabel Deutschland and Vodafone are an ideal fit," said Kabel CEO Adrian von Hammerstein. "Together, we have the opportunity to become Germany’s leading telecommunications and television provider and to create what for the German market is a unique, winning combination of fixed line and mobile communications.”

“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,” Vodafone CEO Vittorio Colao said.
“The combination of Vodafone Germany and Kabel Deutschland will greatly enhance our offerings in response to those needs.”

Tony Ball, chairman of the supervisory board of the firm, said: "The company is now poised for further growth as a hub for next-generation broadband and content distribution, extending Vodafone’s proven capabilities in mobile networks.”

Email: Georg.Szalai@thr.com

Twitter: @georgszalai