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Vodafone to buy Kabel for €7.7bn

Intends to build on TV and fixed line markets.

Vodafone Group has agreed to acquire the German cable operator Kabel Deutschland Holding for €7.7bn (£6.6bn), or €87 per share, after months of discussions.

Vodafone’s offer of €87 per share includes a dividend of €2.50 planned for the financial year. It is an increase of 37 per cent over the share price of Kabel Deutschland as on 12 February 2013, when the speculation on the deal first emerged, and represents 14% premium on the weighted three-month average price.

The telecom major has also agreed to take over a debt of €3bn, bringing the total value of the deal to €10.7bn.

The British telecom raised its offer after US-based Liberty Group made a rival proposal for €85 a share last week. Liberty bought UK’s Virgin Media earlier in the year.

Kabel Deutschland said it expected the deal with Vodafone to benefit customers, employees and shareholders of the two companies.

Tony Ball, chairman of the supervisory board of Kabel Deutschland, 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.”

Under the business combination agreement, Kabel Deutschland will remain a separate legal entity within Vodafone Group with headquarters in Unterfoehring, near Munich.

In addition to its existing housing association customers, Kable Deutschland will be responsible for the entire retail fixed line business, including product development and marketing, of Vodafone in Germany.

The two companies will now jointly have revenues of €11.5bn, 32.4 million mobile customers, five million broadband and 7.6 million TV customers in Germany. Kabel Deutschland reported net revenues of about €1.80bn for the year ended March 31.

Kabel Deutschland in a statement said that the takeover is primarily intended for growth in telecommunications and TV market, by combining its fixed line infrastructure with Vodafone’s strong position in mobile communications.

Adrian Hammerstein, CEO of Vodafone, said: “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.”