Vodafone Group Plc (ADR) (NASDAQ: VOD) announced on Monday that it has agreed to acquire, Germany’s leading cable operator Kabel Deutschland in deal valued at 7.7 billion euro (approximately $10 billion). The move will allow Vodafone to expand its traction in TV and fixed-line business at time when competition is intensifying in these businesses across Europe. The acquisition will help Vodafone to expand its customers’ base for its cellphone and broadband services in Germany.
The deal is Vodafone’s largest ever in last six years and is second major transaction involving European fixed line network business in last one year.
Just last year, Vodafone, which is the world’s largest cellphone services provider, purchased fixed line operator, Cable & Wireless Worldwide in deal valued at $1.7 billion.
According to the terms of the deal, Vodafone would offer 87 euro a share, which represents 38% premium over the stock’ price when the cellphone service giant showed interest in the German Company, for the first time in February.
Vodafone said that synergies arising from the transaction will exceed 300 million euro, annually from the fourth year following the merger. The Company said that the merger will improve customer loyalty as well boost cross-selling of products, adding that it expects revenue synergies of euro 1.5 billion.
Vodafone said that the merged operations will result in about 32 million customers for cellphone services, 5 million for broadband service and approximately 8 million for cable in Germany with an annual revenue of euro 11.5 billion.
Commenting over the deal, Vodafone’s Chief Executive, Vittorio Colao said to analysts during conference call, “This is a unique deal in Europe’s most solid economy… We see ourselves as a data company in every home and in every office.”
While Goldman Sachs and UBS are advising Vodafone on the deal, Morgan Stanley and Perella Weinberg Partners are advising Kabel Deutschland
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