Vodafone has made a preliminary offer to buy German cable operator Kabel Deutschland for at least $9.5 billion (£6 billion), which would boost the mobile operator’s broadband and TV offerings.
Vodafone issued a statement confirming it has approached Kabel Deutschland. Sources cited by Bloomberg said that Vodafone is offering between €81-82 (£68-69) per share, but Kabel has apparently rejected the offer as too low.
Kabel Deutschland boasts 8.5 million customers in Germany, which would give Vodafone a huge boost and expand its services into the fixed-line market. It could potentially offer paired broadband, TV and mobile packages to attract even more people.
The two companies are not yet in formal talks, and Vodafone stated that a final offer may not be made. Vodafone's interest in Kabel Deutschland was revealed as much as four months ago, sending the cable firm's shares up by as much as 27 per cent.
Vodafone would have to take on additional debt to finance the deal, which would negatively hit its rating with financial institutions. Its Chief Financial Officer, Andy Halford, said the company would be content with a downgrade from A- to BBB+ by Standard and Poor's, if it could make the right acquisition.
Another cable company, Liberty Global, is also interested in acquiring the German firm, so Vodafone may end up with a bidding war on its hands.