Vodafone Group Plc. signed a preliminary agreement to acquire the German Kabel Deutschland Holding AG after offering a higher price of its previous offer.
The purchase of Kabel brings to Vodafone access to 8.5 million connected households and potential customers for phone, Internet and TV subscriptions packages. Vodafone said it would pay 87 euros for Kabels shares. The board of Kabel Deutschland said it would recommend the offer to its shareholders, meaning the UK communication company is very close to acquire the company before John Malones Liberty Global which was also bidding for Kabel.
“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 Chief Executive Vittorio Colao said, cited by Reuters.
The UK company had to raise its offer following a last-minute bid from Liberty Global after sources told Reuters that Europes leading cable operator had entered the fray earlier this month with an offer of 85 euros per share.
“Buying Kabel Deutschland could help Vodafone to reinvigorate its struggling fixed-line operation,” said James Barford, a London-based analyst at Enders Analysis, in a note for Bloomberg. Vodafone, the world’s second-largest wireless carrier, made a deal two months ago with Deutsche Telekom AG to use its high-speed Web network in Germany. The deal for Kabel Deutschland means Vodafone has to find a way to integrate two fixed-line networks and consumer offers, Barford said.
Vodafone lost 0.51% of its share price on Friday and being up 8.26% year to date. Kabel Deutschland lost 3.63 same day after the European benchmark indexes plunged. The German company is up 14.24% year to date.
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