Telecom Lead Europe:Vodafone and Liberty Global are facing several hurdles to buy Kabel Deutschland.
Liberty Global of the U.S. is ready to offer 85 euro a share for buying Kabel Deutschland against Vodafone’s 81-82 euro a share offer.
Reuters reported that both Vodafone and Liberty Global face several challenges to buy Germany’s largest cable company.
While Vodafone will face regulatory challenges, rival bidder Liberty Global has both regulatory and funding hurdles to overcome.
Liberty Global, which owns Unity Media, Germany’s second biggest cable operator, joined the race on Tuesday.
Vodafone wants to buy the cable company in order to offer TV, fixed line and broadband services to its mobile customers, while Liberty Global wants more consolidation in one of its best performing markets.
A Liberty Global deal would be closely scrutinized by German anti-trust authorities.
Liberty Global’s CFO Charles Bracken told a Goldman Sachs cable conference on June 12 that while the industrial logic for consolidation in Germany was compelling, regulatory opposition remained a significant barrier to any deal in the near future, the bank said in a note.
Germany’s competition regulator in February blocked Kabel Deutschland’s bid to take over smaller Berlin-based cable group Telecolumbus for 618 million euros.
Liberty Global’s Unity Media Kabel BW and Kabel Deutschland hold about 15 percent of the German broadband market. With cheaper prices and higher speeds, they have been winning customers from Deutsche Telekom, which still has more than 40 percent of the market.
Vodafone holds roughly 12 percent of the German broadband market, and rents wholesale capacity from Deutsche Telekom to provide the service to customers.
Liberty, which is owned by U.S. tycoon John Malone, bought Virgin Media in Britain for about $15.75 billion in February and a 13 percent stake in Ziggo in the Netherlands for 633 million euros ($844.9 million) in March.
