Vodafone Group Plc has reached a preliminary agreement to buy Kabel Deutschland Holding AG after increasing its bid for Germany’s largest cable company to about 7.7 billion euros ($10.1 billion), three people familiar with the matter said Sunday.
Kabel Deutschland’s board is set to recommend the offer after Newbury, England-based Vodafone raised its bid to 87 euros a share from the original 80 euros, said the people, who asked not to be identified because the talks are private. Both companies’ boards wee meeting Sunday to sign off on the deal and an announcement may come Monday, the people said.
Buying Kabel Deutschland would give Vodafone access to the German company’s 8.5 million connected households and potential customers for combined landline, mobile and TV subscriptions. The U.K. company has been vying with Colorado billionaire John Malone’s Liberty Global Plc, which last week made its own preliminary offer for Kabel that was said to be valued at 85 euros a share.
Vodafon’s 87 euro offer is 37 percent more than Kabel Deutschland’s closing price on Feb. 12, the day before Vodafone’s interest was initially reported, and above its June 21 close of 84.10 euros.
Simon Gordon, a spokesman for Vodafone, the second-largest wireless carrier in the world, declined to comment. Insa Calsow, a spokeswoman for Kabel Deutschland, also declined to comment.
The agreement would value Kabel Deutschland’s equity at about 7.7 billion euros and produce an enterprise value, which includes debt, of about 10.7 billion euros, the people said. Vodafone initially offered 80 euros a share before raising to 85 euros and eventually to 87 euros, one of the people said.
Phone companies across Europe are bulking up their networks and adding services as they work to increase customer bills and loyalty. Bundles of TV, Internet and phone service are becoming increasingly popular, stoking deals and partnerships between carriers.
More than $80 billion in telecommunications and cable transactions have been announced or completed this year, as companies from Dish Network Corp. to Japan’s SoftBank Corp. to Vodafone prowl for acquisitions.
AT&T Inc., the second-largest U.S. wireless carrier, explored potential deals in the past two months including buying part of Telefonica SA or some of its foreign assets, three people familiar with the situation said last week.
Kabel Deutschland’s management, led by Chief Executive Officer Adrian von Hammerstein, may have had concerns that Liberty Global’s deal would have run into obstacles from regulators.
Liberty Global entered Germany, Europe’s biggest telecommunications market, with the acquisition of Unitymedia in 2010. It was forced to take steps such as removing encryptions and opening contracts with housing associations to rivals when it added operator KabelBW the next year to form the country’s second-largest cable operator.
Regulators have blocked a number of deals recently, leading phone companies to lobby the European Commission, the European Union’s executive arm, for a more lenient regulatory environment.
Kabel Deutschland was blocked by the German antitrust regulator from buying Berlin-based cable operator Tele Columbus Group in February.
© Copyright 2021 Bloomberg News. All rights reserved.