British group Vodafone has submitted an increased bid to take over Kabel Deutschland, the largest cable operator in Germany, in a deal worth €7.7 billion. Kabel Deutschland Board will recommend the shareholders to accept the offer of €87 per share cash offer, 37% above the German company quotation on 12 February, before the first information was made public on the possible takeover. Friday, Kabel Deutschland shares closed at €84.1.
According to sources close to the deal, Vodafone initially offered €80 euros per share, increasing thereafter its bid to €85, then to €87.
“I think it is a very fair price. Clearly we’re in a very low interest-rate environment, so the costs for us to fund this deal are extremely low by historical standards,” said Vodafone Chief Financial Officer Andy Halford on a conference call.
The transaction will result in cost and capital spending synergies of more than €3 billion, Vodafone said in a press release on Monday.
“Kabel Deutschland and Vodafone are an ideal fit. 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,” said Adrian von Hammerstein, Kabel Deutschland Chief Executive Officer, in a statement.
Kabel Deutschland has a coverage of 8.5 million households in Germany.
“They finally decided to go for it when growth expectations have re-rated and valuation’s at an absolute peak. There’s an opportunity for them to get more active in the consumer unified-conversion market space, and this offers them a route to that,” said Guy Peddy, an analyst with London-based Macquarie Bank Ltd.
U.S. group Liberty Global, controlled by billionaire John Malone, made last week a competing bid for Kabel Deutschland, placed according to sources close to the situation at 85 euros per share.
In May, Vodafone has signed a deal with German giant Deutsche Telekom for the use of its high speed web network in Germany.
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