Report: Vodafone preps takeover of giant cable operator Kabel Deutschland

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Vodafone is considering a bid to acquire Germany's largest cable operator, Kabel Deutschland, according to multiple reports, which all cited unnamed sources.

Vodafone has yet to approach the German cable company with an offer, although senior executives are said to have been discussing a potential bid. One informed person said that there could be contact with Kabel Deutschland later this week, according to the Financial Times. The German publication Manager Magazin first reported on the possible deal, without citing its sources, and Reuters and Bloomberg also reported that Vodafone is considering a deal for Kabel Deutschland.

News of a possible bid pushed shares in Kabel Deutschland up, givng the company a market value of €5.6 billion, according to the FT. At the end of its last quarter Kabel Deutschland had net debt of €2.8 billion, giving the company an enterprise value of €8.4 billion.

The takeover plan has been devised by Vodafone's group strategy chief, Warren Finegold, as part of an effort to build the operator's cable assets in Germany, according to Manager Magazin. However, any formal approach to Kabel Deutschland would need the approval of Vodafone CEO Vittorio Colao and the company's board, although Colao is reportedly to in favour of the acquisition.

Vodafone and Kabel Deutschland declined to comment, according to Bloomberg.

Vodafone has been linked in the past to buying or partnering with cable operators across Europe to gain access to their fibre networks. Rumours a few weeks ago indicated that Vodafone was planning to bid for Swisscom-owned Fastweb, which seems to have come to nothing. Last year the operator acquried Cable & Wirelss Worldwide for its fibre networks.

Colao told the FT following Vodafone's third-quarter results last week that it continues to look at the cable market in Europe. He indicated that the company would either make commercial arrangements with cable firms, invest in its own fibre networks as it had done already in Portugal and elsewhere, or "look at existing assets" to acquire.

The German cable market is now largely controlled by Unitymedia, owned by Liberty Global, and Kabel Deutschland. The market has undergone significant restructuring as these larger two rivals acquired smaller companies to create more efficient scale, according to Reuters.

For more:
- see this Manager Magazin (translated via Google Translate)
- see this Financial Times article (reg. req.)
- see this Reuters article
- see this Bloomberg article

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