adminKabel Deutschland’s board is set to recommend the 87-euro per share cash offer, the companies said in separate statements yesterday, confirming a Bloomberg News report yesterday. The combination will result in synergies in cost and capital spending exceeding 3 billion euros after integration costs, Vodafone said.
Buying Kabel Deutschland would give Newbury, England-based Vodafone access to the German company’s 8,5 million connected households and potential customers for combined packages of phone, Internet and TV subscriptions. The UK company has been vying for Kabel with billionaire John Malone’s Liberty Global Plc, which last week made its own preliminary offer, said to be valued at 85 euros a share.
“They finally decided to go for it when growth expectations have re-rated and valuation’s at an absolute peak,” said Guy Peddy, a London-based analyst with Macquarie Bank Ltd. “There’s an opportunity for them to get more active in the consumer unified-conversion market space, and this offers them a route to that.”
Vodafone was interested in bidding for Kabel Deutschland in February 2010, with offers valuing the company at 5 billion euros at the time, people familiar with the matter said that year. Still, Kabel Deutschland’s share price almost tripled in the three years since that report. Kabel Deutschland shares rose as much as 2,3 percent and traded up 1,8 percent at 85,62 euros at 1:22pm in Frankfurt, while Vodafone fell 0,5 percent to 175,05 pence in London.
Kabel Deutschland yesterday forecast sales growth of 8 percent for the fiscal year ending March 31, 2014 after revenue increased 7,7 percent to 1,83 billion euros in the previous period. Adjusted earnings before interest, taxes, depreciation and amortisation will probably equal 48 percent of revenue, the Unterfoehring, Germany-based company said in a statement yesterday.
Vodafone’s 87-euro offer is 37 percent more than Kabel Deutschland’s closing price on February 12, the day before Vodafone’s interest was initially reported, and 3,4 percent above its June 21 close of 84,10 euros. The offer includes the 2,50-euro dividend that Kabel Deutschland announced in February.
“I think it is a very fair price,” Vodafone Chief Financial Officer Andy Halford said on a conference call today. “Clearly we’re in a very low interest-rate environment, so the costs for us to fund this deal are extremely low by historical standards.”
Depending on when the deal closes, Vodafone may be able to offer new services by the end of the year or early 2014, Philipp Humm, Vodafone head of northern Europe, said. — Bloomberg.
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