John Malone’s Liberty Global Inc. (LBTYA:US) is considering a takeover bid for Kabel Deutschland Holding AG (KD8), the cable provider that’s also a takeover target for Vodafone Group Plc (VOD), two people familiar with the matter said.
No decision has been made and Englewood, Colorado-based Liberty Global is aware of the antitrust issues of any deal because it already controls Germany’s second-largest cable company, the people said, asking not to be identified because the deliberations are confidential. Kabel Deutschland rose 4.3 percent to 73.31 euros at 4:09 p.m. in Frankfurt, valuing the company at 6.5 billion euros ($8.5 billion).
Buying Kabel Deutschland would add 8.5 million subscribers to Liberty Global’s 7 million users in Germany and open up vast areas of the country for selling additional Internet and phone connections. It would also create a nationwide rival to Deutsche Telekom AG (DTE) and Vodafone, which are working to overhaul their fixed-line networks to boost speeds of their broadband offers.
“A Kabel Deutschland acquisition would be completely in following with their existing strategy,” Robin Bienenstock, an analyst at Sanford C. Bernstein, said in a note. “A deal between Liberty Global and Kabel Deutschland would put Vodafone under more pressure, and reduce their optionality in Germany.”
Bert Holtkamp, a Liberty Global spokesman in Amsterdam, declined to comment, as did Insa Calsow, a Kabel Deutschland spokeswoman near Munich, and London-based Vodafone spokesman Simon Gordon. Martina Parulava, a spokeswoman at Germany’s Federal Network Agency in Bonn, declined to say whether such a deal would gain antitrust approval.
Kabel Deutschland rose as much as 8.7 percent in Frankfurt after Manager Magazin reported the news. Liberty Global shares fell as much as 2.4 percent to $72.72 today in New York trading.
Vittorio Colao, Vodafone’s chief executive officer, has said he wants to gain assets that would allow the company to offer combined Internet, mobile and landline services across Europe. The company had internal discussions about an acquisition of Kabel Deutschland, people familiar with the plans said in February.
In 2010, Liberty Global acquired Unitymedia, with operations in central and western Germany, and added southwest operator Kabel Baden-Wuerttemberg the following year.
This week, Liberty Global won European Union approval to buy U.K. cable provider Virgin Media Inc. (VMED:US) for $16 billion. Liberty Global purchased a stake in Dutch cable operator Ziggo NV (ZIGGO) last month.
German regulators placed conditions on Liberty Global’s 2011 accord to buy KabelBW, including removing basic encryption of digital free television programs and enabling competitors to bid on contracts with housing associations.
Kabel Deutschland itself was blocked from buying smaller rival Tele Columbus Group in February after the cartel office said the deal would hamper competition.
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