Vodafone Group Plc (VOD) plans to complete its acquisition of Kabel Deutschland Holding AG (KD8) after the German cable operator’s shareholder meeting in October, according to three people familiar with the matter.
The companies aim to wrap up the transaction following Kabel Deutschland’s annual meeting scheduled for Oct. 10, pending antitrust approval, said the people, asking not to be named discussing internal deliberations. Vodafone is in talks with the European Commission to address competition concerns and will decide on whether to file for EU antitrust approval before or after the summer break depending on the outcome of those negotiations, a fourth person said.
Completing the deal after the shareholder meeting suggests Vodafone, the world’s second-largest wireless provider, hasn’t wavered in anticipating a simple antitrust process, upon which much of the timing depends. Vodafone’s 87 euro-a-share ($113) offer included a 2.50-euro dividend Kabel Deutschland promised to pay in October. Given the timeframe the people said they anticipate, Kabel Deutschland would pay that dividend directly, effectively cutting Vodafone’s offer to 84.50 euros.
“We don’t expect these discussions to be very complicated,” Vodafone Chief Executive Officer Vittorio Colao said on a conference call last month, adding “any kind of competition concern” will be very light.
Vodafone plans to submit its official offer by month-end, the people said. Then Kabel Deutschland’s supervisory board is scheduled to meet Aug. 1 to discuss it, one of the people said. The company has said it would recommend Vodafone’s bid to shareholders. Vodafone said previously that the deal was expected to close this year.
Kuzey Esener, a Vodafone spokesman, and Kabel Deutschland’s Insa Calsow declined to comment on the timetable.
Vodafone fell 1.1 percent to close at 193.45 pence in London. Kabel Deutschland added 0.2 percent to 84.39 euros on the Frankfurt exchange.
The deal would give Vodafone access to 8.5 million households in Germany, Europe’s largest telecommunications market, and bolster its capacity to sell combined wireless, fixed-line Internet and television services. It would also intensify competition with Deutsche Telekom AG (DTE), the country’s former phone monopoly, on whose network Vodafone has so far relied for wireline services.
Mobile operators are looking to acquire fixed-line assets as smartphone adoption slows and heavy regulation restrains wireless profits. Last year, Vodafone bought the U.K.’s Cable & Wireless Worldwide Plc to cope with surging data traffic on its own network in its home country.
There’s still a possibility the deal could conclude before the October meeting should Vodafone secure regulatory approval quickly, one of the people said. Antitrust reviews will probably be completed this year, the person said.
Colorado billionaire John Malone’s Liberty Global Plc offered 85 euros a share in an informal bid a few days before Vodafone’s offer and isn’t expected to make a counterbid, although that remains an uncertainty that could alter the schedule, one of the people said.
Liberty Global, which controls Germany’s second-largest cable operator, might have had more trouble getting the deal approved with the country’s antitrust regulators than Vodafone’s offer, as the British company doesn’t have existing cable assets there. Still Kabel Deutschland and Vodafone are also considering the possibility that an antitrust process would last into 2014, the people said.
Deutsche Telekom and peers would probably be consulted in an antitrust review, according to Andreas Middel, a spokesman for the German carrier. Should Vodafone’s offer be approved, Deutsche Telekom will demand that the “new, larger competitor is forced to let rivals onto its network for regulated fees” or that the former monopoly be exempted from such regulation, spokesman Philipp Blank said in an e-mail.
“Cable operators have been in a very comfortable position so far,” Blank said.
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