Vodafone offers $10.1 bn for Germany's Kabel Deutschland

Vodafone Group Plc has reached a preliminary agreement to buy Germany's largest cable company Kabel Deutschland Holding AG (KD) for about €7.7 billion ($10.1 billion) in cash, Bloomberg today reported, citing three people familiar with the matter.

Kabel Deutschland's board is planning to recommend the offer after Vodafone raised its bid to €87 a share from its earlier informal offer of €80 a share, and may announce the deal today after both companies' boards met yesterday, the report added.

The proposed deal comes a week after KD said that it had received a preliminary takeover bid from its US rival Liberty Global, setting up a potential bidding war with Vodafone Group. (See: Liberty Global tables preliminary bid for German cable operator Kabel Deutschland)

The Financial Times had reported that Liberty offered about €85 a share, while Vodafone's informal offer valued KD at between €81 and €82 a share.

The share price of KD has risen by 27 per cent after Vodafone's interest first surfaced four months ago.

Both Liberty Global and Vodafone have shown interest in KD since both already operate in Germany, but Deutsche Telekom, the market leader, will not be able to bid due to antitrust issues.

By seeking to acquire the biggest cable provider in Germany, with 8.5 million connected households, Vodafone would add fixed-line services to its mobile offerings and block a potential acquisition by Liberty Global.

KD offers digital, high definition and analog TV, Pay TV and DVR offerings, Video on Demand, broadband and fixed-line phone services via cable as well as mobile services.

The publicly-listed company operates cable networks in 13 German federal states and supplies its services to approximately 8.5 million households.

The company has approximately 3,500 employees, market capitalisation of €6.6 billion, and annual turnover of €1.7 billion.

Vodafone emerged as a market leader in mobile in Germany following its huge £112 billion merger with Mannessmann in 2000.

According to analysts, consumers were increasingly looking to a single company providers for phone, broadband, mobile and TV known as ''triple play'' or ''quad play.''

They say triple-play operators were increasingly taking a share in mobile, whereas mobile operators including Vodafone had failed to win significant share in the triple-play segment.