Battle Heating Up Over German Cable Operator

LONDON â€" John C. Malone is picking a fight with Vodafone in Europe.

Less than a week after the British telecommunications giant said it had
approached the German cable operator Kabel Deutschland over a potential takeover, Mr. Malone’s Liberty Global is now trying to muscle in on the action.

Any deal for Germany’s largest cable company would likely top more than $10 billion, and represent one of the largest European acquisitions so far this year.

The fight for control over Kabel Deutschland, whose shares rose in early morning trading in Frankfurt, but gave up the gains by the afternoon, is the latest in a number of deals in Europe’s cable and telecommunications sector over the last 18 months.

Earlier this year, Liberty Global, which already owns Germany’s second-largest cable company, bought the British company Virgin Media for $16 billion, as part of its expansion into the Continent’s cable industry.

Others international players, including the Mexican billionaire Carlos Slim Helú, also having been picking up assets, and media reports from Spain claimed on Monday that AT&T had been thwarted in a potential $70 billion takeover approach from the Spanish telecoms company Telefónica.

Telefónica denied that it had been in contact over a potential deal.

As both Vodafone and Liberty Global vie to acquire Kabel Deutschland, analysts say either company may have to pay as much as $10.7 billion for the German company, which has 8.5 million customers across the European country.

For the British company, the move would help to add cable services to its existing cell phone and fixed-line operations in Germany. In contrast, Liberty Global could consolidate its current local cable business, while also seeing off competition from the likes of Deutsche Telekom.

“There’s more strategic value for Liberty doing a deal,” Andrew Hogley, a telecommunications analyst with Espírito Santo Investment Bank in London. “Liberty has a stronger appetite for this type of business.”

UBS and Goldman Sachs are advising Vodafone, while Morgan Stanley and Perella Weinberg Partners are advising Kabel Deutschland.