Vodafone aims to complete takeover of German cable company
Elliott hasn’t reduced its 11% holding since September, when investors were asked to tender their Kabel Deutschland shares to Vodafone, the German company said at a shareholder meeting in Munich.
The hedge fund may be betting it can force a higher price from Vodafone using that strategy, a person familiar with the takeover offer said last month.
In Germany, investors can refuse to sell during a takeover attempt and ask for a higher price, leaving it to a court to decide on the stock’s value.
About 77% of Kabel Deutschland’s shareholders accepted Vodafone’s offer, the Newbury, England-based company said on Oct 7. All members of Kabel Deutschland’s board have agreed to sell their shares to Vodafone as well, chief executive Adrian Von Hammerstein said.
Vodafone expects to pay investors next week who have accepted the offer, it said.
Von Hammerstein will receive €6.6m in the sale, he said.
Investors are voting on whether to approve a €2.50 per-share dividend at today’s meeting.
This is coming before the buyout offer closes next week, meaning Vodafone will pay €84.50 a share, or €7.5bn.
Vodafone had agreed to cover the dividend if the deal had closed earlier.
A spokesman for Elliott Management didn’t immediately respond to a call and e-mail seeking comment.
In addition to getting Kabel Deutschland’s 8.5m customers, the deal will give Vodafone a way to expand sales, offering packages of TV, Internet and phone service.
Vodafone chief executive Vittorio Colao has said he plans to take this approach to the rest of Europe, betting that selling multiple services to a household will improve customer retention and increase monthly bills.
Kabel Deutschland shares fell less than 1% to €93.35 in Frankfurt. Vodafone rose 1.1% to 217.40 pence in London.
Germany is Vodafone’s biggest market, accounting for 18 % of revenue, and has performed relatively well during a Europe-wide slowdown that’s cut sales and caused the company to report a £7.7bn impairment on its businesses in southern Europe in the fiscal year ended March 31.
German sales declined 4.6% that year compared to a 16% decline in Italy and an 18% drop in Spain.
Europe is going through a wave of consolidation attempts as bidders take advantage of low valuations for telecommunications assets.
Vodafone sparred with John Malone’s Liberty Global Plc for control of Kabel Deutschland.
Liberty bought UK Internet and television provider Virgin Media Inc in June and has been increasing its stake in Dutch cable-TV provider Ziggo NV, reaching 28.5%, according to a July 26 regulatory filing.
— Bloomberg
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