UPDATE 1-Vodafone may trump Liberty with $10 bln cash bid for Kabel -sources

Wed Jun 19, 2013 11:02am EDT

* Companies in talks over 85-86 euro/share cash bid -sources

* Liberty's 85 euro/share offer is partly in stock - sources

* Kabel shares at record high, valuing it at 7.55 bln euros

FRANKFURT/LONDON, June 19 (Reuters) - Vodafone is discussing a 7.6 billion euros ($10 billion) cash bid with Germany's No. 1 cable operator Kabel Deutschland and is confident its offer and absence of antitrust issues put it in a better position than rival Liberty Global, two sources familiar with its thinking said on Wednesday.

Liberty Global, which owns Unity Media, Germany's No. 2 cable operator, made an 85-euro-a-share offer on Tuesday, two people familiar with the matter said, just days after sources said Vodafone had offered 81-82 euros a share or 7.2 billion euros in cash.

Vodafone is now mulling an offer of about 85-86 euros a share, or at least 7.5 billion euros, a separate source close to the company told Reuters on Wednesday.

Vodafone and Kabel Deutschland declined to comment.

The British mobile operator had considered raising its initial offer before Liberty Global joined the bidding race, one source close to the matter said last week.

Vodafone wants Kabel so that it can offer more competitive, comprehensive packages with television, fixed line and broadband services for more of its mobile customers, while Liberty Global wants to expand in one of its best performing markets.

"Vodafone has told Kabel Deutschland they are working on an improved bid. There is still nothing concrete on the table," said one of the sources familiar with Vodafone's thinking.

Three separate sources familiar with the negotiations said an offer from Liberty would include a share component.

"Kabel Deutschland shareholders are not keen to accept the risks of an offer which includes a share portion and the risk of waiting 9-12 months on regulatory approval," one of them said.

Also a Liberty Global deal would be closely scrutinised by German monopoly watchdog. Germany's competition regulator in February blocked Kabel Deutschland's bid to take over smaller Berlin-based cable group Telecolumbus for 618 million euros.

A source familiar with the situation said Liberty has already talked to the German antitrust office to discuss the deal, but declined to elaborate.

A spokesman for the cartel office said that the regulator holds talks with cable providers on a regular bases and that no formal request had been submitted by Liberty Global.

The deal may also be referred for review by the competition watchdog in Brussels, which reviews large deals in the European Union and those with potential regional importance.

Kabel Deutschland shares were 0.1 percent higher at 85.61 euros by 1425 GMT. The stock had hit an all-time high of 86.31 euros, valuing the company at 7.6 billion euros.

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