Kabel Deutschland
Employees of Kabel Deutschland work in front of a monitor wall at the Kabel Deutschland playout center in Frankfurt

British telecoms major Vodafone has raised its preliminary offer to buy Kabel Deutschland, following a rival bid from US media group Liberty Global, and the German cable provider is more likely to prefer the revised bid due to regulatory and financial concerns.

Citing "people familiar with the bid", Bloomberg reported that Vodafone lifted its offer to €7.5bn ($10bn/£6.4bn), valuing Kabel Deutschland at €85 per share. An earlier offer of €80 to €82 per share was rejected by the German company, who weighed it as inadequate.

Vodafone, the second-largest wireless carrier in the world, is now in discussions with Kabel Deutschland and is likely to present an official offer in the coming weeks after studying its books, the people told Bloomberg.

The revised offer comes after US-based Liberty Global placed a rival bid for Kabel Deutschland, also valuing the company at €85 per share. The media group is planning to offer assets instead of cash in the deal, according to Financial Times that quoted "two people familiar with the move."

Liberty proposes to inject its existing German cable assets into a merged company and keep Kabel Deutschland's public listing. It already owns Germany's second-largest cable operator, Unitymedia, and is likely to undergo strict regulatory scrutiny, in the event of a firm offer.

Kabel Deutschland's management is expected to prefer Vodafone's all-cash offer as it may have better chances of getting approval from Germany's competition watchdog, Federal Cartel Office, one of the people told Bloomberg.

In addition, Vodafone has stronger finances than its US challenger, whose debts amount to 4.6 times earnings before interest, taxes, depreciation and amortization.

The acquisition of Kabel Deutschland would give Vodafone access to the German company's 8.5 million customers. Vodafone, which has more than 407 million customers across the globe, plans to change its product strategy with the deal. The company was primarily focusing on mobile phone services and was renting broadband lines from competitors.

The British company has recently expanded its services portfolio in Germany through a tie-up with Deutsche Telekom to offer pay-TV via high-speed broadband to its customers.

It has been pursuing a takeover of Kabel Deutschland since earlier this year, and hired Goldman Sachs on order to advise it on the deal.