Kabel’s board said this morning that it was recommending the offer, which works out at about €87 a share. It also includes €3bn of net debt, pushing the value of the deal up to €10.7bn.
Vodafone had been in half-hearted competition with US cable firm Liberty Global, which bid about €85 a share last week – but with all quiet on the Liberty front this morning, Vodafone seems to be the victor.
Vodafone chief executive Vittorio Colao kept things vague during his announcement of the deal this morning.
‘The transaction announced today… will lead to the creation of an operator with significant competitive scale, attractive operating and capital investment efficiencies,’ he said.
Kabel has eight million customers, so the deal will help Vodafone to expand its share of the German consumer market (it already owns mobile operator Mannesmann, which it paid £101bn for in 2000). And with 4G about to become standard across Europe, the mobile operator is presumably hoping Kabel’s fixed-line network will free up capacity on Vodafone's busy German network to allow TV to customers who want cat videos on-demand to do so without too much additional investment.
It’ll also do nothing to quell the rumours that it could be about to do the same thing in other European markets: it’s said to be eyeing up Italian broadband operator Fastweb, while last year it lost out on a bid to merge with Greek rival Hellas. There’s even talk of it selling up its stake in US phone network Verizon Wireless, worth at least $120bn.
If the deal goes ahead (there’s a lot more to be discussed before it’s official), it could eventually put Vodafone in the same league as (in the UK) Sky and Virgin Media, allowing it to offer fixed-line broadband and cable television packages.
Or, as Vodafone preferred to describe it, a ‘unified communications service’. Jazzy.