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Vodafone to buy Liberty Global European assets for €18.4bn Vodafone makes €18bn swoop on Liberty Global cable networks
(about 2 hours later)
Vodafone has agreed to pay €18.4bn (£16.1bn) for the majority of European assets owned by the US cable giant Liberty Global. Vodafone will pay €18.4bn (£16.1bn) for cable networks in Germany and eastern Europe owned by US firm Liberty Global.
The UK telecoms group said it will buy businesses in Germany, Hungary, Romania and the Czech Republic. The deal will allow Vodafone to expand its mobile, TV and broadband services in Hungary, Romania and Czech Republic.
The deal will allow Vodafone to expand its mobile, cable television and broadband services across Europe. It will also create a stronger "quad play" competitor for Deutsche Telekom in Germany.
Liberty Global owns Virgin Media, which it plans to retain, as well as its operation in Ireland. The long-expected deal with Liberty Global, which also owns Virgin Media, is Vodafone's biggest since its £112bn takeover of Mannesmann in 2000.
Vodafone's share price rose by 1% to 209.8p after announcing the long-expected deal with Liberty Global, chaired by US billionaire John Malone, who is also the largest shareholder in the business. Vodafone said the transaction, which includes Unitymedia in Germany, would create a "converged national challenger" in the country.
It is Vodafone's biggest deal since its £112bn ground-breaking hostile takeover of Germany's Mannesmann in 2000. Deutsche Telekom, which is Europe's biggest telecoms operator by revenue and owns T-Mobile, has voiced strong objections to the move.
Vodafone said the transaction, which includes Unitymedia in Germany, would create a "converged national challenger" to the "dominant incumbent" in the country. Its chief executive, Timotheus Höttges, said it would distort competition: "I personally will fight for fair competition for our customers, to ensure that we do not face a disadvantage."
Deutsche Telekom, which is Europe's largest telecoms provider by revenue and owns T-Mobile, has strongly objected to the move. He has also questioned whether regulators would approve the tie-up.
'Greater competition' However, Vodafone chief executive Vittorio Colao said that deal "creates a strong competitor to Deutsche".
Deutsche Telekom's chief executive, Timotheus Höttges, said in February that the deal was "completely unacceptable".
He said: "I do not see that this kind of concentration in the cable market can be supported from regulatory bodies."
However, Vodafone chief executive Vittorio Colao said on Wednesday that the deal "creates a strong competitor to Deutsche".
Vodafone already owns the largest cable business in Germany after it acquired Kabel Deutschland for €7.7bn five years ago.Vodafone already owns the largest cable business in Germany after it acquired Kabel Deutschland for €7.7bn five years ago.
By purchasing Unitymedia, it is acquiring Germany's second-largest cable operator. Unitymedia is the second-largest cable network, operating in the three of Germany's 16 states that Vodafone does not already cover.
Vodafone's cable business operates in 13 of Germany's 16 federal states, while Unitymedia's operation covers the remaining three states.
Mr Colao said that there was "no geographical overlap" between the two businesses.Mr Colao said that there was "no geographical overlap" between the two businesses.
Mike Fries, chief executive of Liberty Global, said: "Even together, Liberty Global and Vodafone, whose cable networks don't compete or overlap, will be half the size of the incumbent operator. It's time to alter market dynamics by unleashing greater investment and competition."Mike Fries, chief executive of Liberty Global, said: "Even together, Liberty Global and Vodafone, whose cable networks don't compete or overlap, will be half the size of the incumbent operator. It's time to alter market dynamics by unleashing greater investment and competition."
Vodafone currently offers only mobile telecoms services in Hungary, Romania and the Czech Republic. Vodafone offers only mobile services in Hungary, Romania and the Czech Republic, but buying Liberty's cable business will allow to expand into TV and broadband in those markets.
The acquisition of Liberty Global's cable business means it will be able to expand into TV and broadband services. As part of the deal, the company will pay Liberty Global €10.6bn in cash, which the US business said would "provide significant additional flexibility to optimise growth and shareholder returns".
As part of the deal, Vodafone will pay Liberty Global €10.6bn in cash, which the US business said would "provide significant additional flexibility to optimise growth and shareholder returns". Vodafone has also agreed to a €250m break fee if the acquisition does not complete.
Vodafone has also agreed to a €250m break fee, which would be payable to Liberty Global if the acquisition does not go ahead. Shares in Vodafone rose 1.2% to 210.1p in morning trading in London.