Liberty Global Said Unlikely to Raise German Cable Offer

Billionaire John Malone’s Liberty Global Plc is unlikely to raise its offer for Kabel Deutschland Holding AG after Vodafone Group Plc agreed to buy the German cable company, people with knowledge of the matter said.

Liberty, which made a preliminary offer for Kabel Deutschland last month, recognizes its bid would face antitrust obstacles and considers Vodafone’s offer expensive, said the people, who asked not to be identified because the talks are private. The company hasn’t made a final decision, they said.

Vodafone announced June 24 that it planned to buy Kabel Deutschland after increasing its bid for Germany’s largest cable company to 87 euros a share, or 7.7 billion euros ($10.1 billion). Liberty, whose offer a week earlier was said to be valued at 85 euros a share, hasn’t been in touch with Kabel Deutschland executives since the agreement with Vodafone, said another person familiar with the matter.

Liberty already owns Germany’s no. 2 cable operator after combining Unitymedia and Kabel Baden-Wuerttemberg GmbH last year, making antitrust approval difficult, the people said. While Vodafone’s offer is all-cash, Liberty proposed a complex structure that involved injecting Malone’s existing cable assets into Kabel Deutschland, people familiar with the matter said earlier.

Kabel’s board is set to recommend the offer from the U.K. company, in what would be the second-biggest takeover of a telecommunications network in Europe this year, according to data compiled by Bloomberg.

Slimming Odds

Mobile operators are looking to acquire fixed-line assets as smartphone adoption slows and heavy regulation restrains wireless profits. Last year Vodafone agreed to buy the U.K.’s Cable & Wireless Worldwide Plc to cope with surging data traffic on its own network in its home country.

Marcus Smith, a spokesman for London-based Liberty, and Insa Calsow, a spokeswoman for Kabel Deutschland, based near Munich, declined to comment.

“The odds of Liberty success seem slimmer and slimmer,” Robin Bienenstock, an analyst with Sanford C Bernstein in London, said in a July 1 note. German regulators would probably subject the deal to a heavy review and Kabel Deutschland’s board has welcomed the Vodafone bid, she said.

Vodafone’s 87-euro offer is 37 percent more than Kabel Deutschland’s closing price on Feb. 12, the day before Vodafone’s interest was initially reported. Liberty considers that a high price based on earnings multiples, the people said.

Kabel Deutschland shares fell 0.2 percent in Frankfurt to 83.87 euros today. Liberty increased almost 1.7 percent to $75.65 at yesterday’s close in New York.

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