U.S. media giant,
Liberty Global Inc.
) has made an offer to acquire Germany's largest cable network
company, Kabel Deutschland Holding AG. Liberty Global Inc. has
Vodafone Group Plc.
) offer of €7.2 billion (approximately $9.6 billion) by making a
counter offer of €7.5 billion (approximately $10 billion).
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However, Vodafone plans to make its offer more attractive after
being refused by Kabel Deutschland.
At present, the German television broadcast market is dominated
by Kabel Deutschland and Liberty Global Inc., which has taken a
number of strategic steps to strengthen its position and continue
business restructuring. In this regard, the company has already
acquired German cable TV aces namely, UnityMedia GmbH and Kabel
Baden-Wuerttemberg GmbH & Co KG.
Kabel Deutschland is worth of €8 billion and covers over 8
million German households. It offers wireline services like HD
and analog TV, Pay-TV and broadband Internet with speeds up to
100 Mbps and fixed-line voice services through cable as well as
wireless services through industry collaborations.
Hence, we believe that the acquisition of Kabel Deutschland will
further strengthen Liberty Global's market position and deliver
strong top-line growth.
A few days back, Liberty Global also acquired the British cable
MSO, Virgin Media, for a total consideration of $15.8 billion or
an enterprise value of nearly $23.3 billion. The acquisition
makes Liberty Global the largest cable TV MSO (multi service
operator) in the world, surpassing
), the largest cable MSO of the U.S. Together, Liberty Global and
Virgin Media will have approximately 25 million subscribers
compared with nearly 22 million subscribers of Comcast.
In the U.K., the merged entity will become a formidable
challenger to British Sky Broadcasting Group plc, which is the
largest pay-TV operator in the U.K. and is partially controlled
However, we remain concerned about the company's highly leveraged
balance sheet. The $29.6 billion debt appearing on its balance
sheet at the end of the first quarter of 2013, may impede the
company's future acquisition plans.
Currently, Liberty Global has a Zacks Rank #5 (Strong Sell).