Vodafone to buy Kabel Deutschland for €7.7bn

Vodafone said the transaction will be implemented as a voluntary public tender offer by its wholly-owned subsidiary Vodafone Vierte Verwaltungsgesellschaft for €84.50 per share in cash plus the payment of the €2.50 dividend announced by Kabel Deutschland on 20 February 2013.
Subject to their review of the formal offer document, Kabel Deutschland’s management and supervisory boards intend to recommend shareholders accept the offer.
Following completion of the transaction, Vodafone will have 32.4 million mobile, 5 million broadband and 7.6 million direct TV customers in Germany. The combined company will have €11.5bn of pro forma revenues in Germany.

Vodafone said it sees significant potential to accelerate the growth in its own and Kabel Deutschland’s broadband, telephony and TV businesses by leveraging Vodafone’s brand and extensive distribution and by cross-selling to each company’s customer base.
The company said its intention is that Kabel Deutschland’s management will be responsible for the combined consumer fixed line business throughout Germany.

“German consumer and business demand for fast broadband and data services continues to grow substantially as customers increasingly access TV, fixed and mobile broadband services from multiple devices in the home and workplace and on the move,” said Vodafone group chief executive, Vittorio Colao. “The combination of Vodafone Germany and Kabel Deutschland will greatly enhance our offerings in response to those needs and is consistent with Vodafone’s broader strategy of providing unified communications services.

The transaction announced today – which the management and supervisory boards of Kabel Deutschland intend to recommend to their shareholders – will lead to the creation of an operator with significant competitive scale, attractive operating and capital investment efficiencies and a combined management team with expertise across all communications segments and technologies.”

“Kabel Deutschland has evolved into one of the most dynamic players in the sector said  Kabel Deutschland CEO Dr Adrian v Hammerstein. “Its high-performance infrastructure and successful strategy makes it ideally placed to continue returning above-average growth in a rapidly changing market. Kabel Deutschland and Vodafone are an ideal fit. Together, we have the opportunity to become Germany’s leading telecommunications and television provider and to create what for the German market is a unique, winning combination of fixed line and mobile communications.”

Vodafone said it will finance the offer from its existing cash resources and committed but undrawn bank facilities.

Goldman Sachs International and UBS are acting as financial advisers to Vodafone Group.