Kabel Deutschland 'Agrees' on €7.7bn Vodafone Offer

Telecoms giant Vodafone has inked a preliminary agreement to acquire German cable provider Kabel Deutschland after raising its offer price amid a rival bid from US-based Liberty Global, according to media reports.

Kabel Deutschland's board is set to recommend the cash offer of €7.7bn (£6.5bn/$10.1bn), valuing the company at €87 per share, Bloomberg reported, citing "three people familiar with the matter". An official announcement over the deal could come on Monday, they told Bloomberg.

The revised offer is a 37% premium to Kabel Deutschland's closing price on 12 February, the day before Vodafone's interest was initially reported. Vodafone will also take up the German company's debt of about €3bn.

Vodafone had lifted its offer of €80 to €82 per share, which was rejected by the German company, after Liberty Global placed a rival bid for Kabel Deutschland, also valuing the company at €85 per share. The debt-laden US group was reportedly planning to offer assets instead of cash in the deal, and the company was expected to face strict regulatory scrutiny due to its other asset holdings in Germany.

Market analysts were expecting Kabel Deutschland's management to prefer Vodafone's all-cash offer as it may have better chances of getting approval from Germany's competition watchdog, Federal Cartel Office.

The acquisition of Kabel Deutschland would give Vodafone access to the German company's 8.5 million customers. Vodafone, which has more than 407 million customers across the globe, plans to change its product strategy with the deal by offering combined land-line, mobile and TV subscriptions. The company was primarily focusing on mobile phone services and was renting broadband lines from competitors.

The British company recently expanded its services portfolio in Germany through a tie-up with Deutsche Telekom to offer pay-TV via high-speed broadband to its customers.

It has been pursuing a takeover of Kabel Deutschland since earlier this year, and hired Goldman Sachs in order to advise it on the deal.