Liberty Global tables preliminary bid for German cable operator Kabel Deutschland

Germany's biggest cable operator Kabel Deutschland Holding AG (KD) yesterday that it had received a preliminary takeover bid from its US rival Liberty Global, setting up a potential bidding war with Vodafone Group.

In a brief statement, KD confirmed media speculation that it has received a proposal from Liberty Global but did not disclose the offer price.

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

Last week, Vodafone Group, the world's second largest mobile phone company, had confirmed media reports that it is in takeover talks with KD.

The statement had come after media had speculated that the London-based mobile-phone company is in talks to buy KD in a €7 billion ($9.3 billion) deal in order to strengthen its triple-play offering of TV, mobile and broadband. (See: Vodafone in talks to buy Kabel Deutschland in $9.3 bn deal)

"Vodafone Group Plc notes the recent speculation regarding a potential offer for Kabel Deutschland Holding AG and confirms that it has made a preliminary approach to KD regarding a possible offer for the company," Vodafone had said in a statement.

Shares of KD have risen 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 fast fixed-line services to its mobile offerings and block a potential acquisition by Liberty Global.

KD offers digital, high definition (HD) 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, a deal that turned out to be hugely over-inflated.

According to industry experts 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 share in mobile, whereas mobile operators including Vodafone had failed to win significant share in the triple-play segment.

Liberty Global, which operates in Germany under the  Unitymedia Kabel BW brand, is the second-largest cable operator in the country. An offer from Unitymedia would come under intense scrutiny from competition authorities.

For Liberty Global, the potential KD deal comes a few months after it acquired UK's Virgin Media in a $15.8 billion cash and stock deal.

Liberty Global had in March acquired a 12.65 per cent stake in Dutch cable TV operator Ziggo NV from Barclays Capital Securities Limited, for a total investment of approximately €632.5 million.

Liberty Global's consumer brands include UPC, Telenet and VTR. It also has a 50-per cent stake in MGM Networks in the US through Europe-based Chellomedia.

Eighty per cent of its revenue comes from Europe, of which, two-thirds comes from four countries, Belgium, the Netherlands, Switzerland and Germany.

Last year, it fully acquired Belgian peer Telenet Group Holding NV for $2.56 billion. In terms of revenues, Telenet is Liberty's second largest business after its European division UPC.

With 23.3 million customers, Europe is Liberty's biggest market and is the largest international cable company with 25 million customers in 14 countries.