Hedge fund sues Kabel Deutschland over Vodafone takeover price

29 Oct 2014

US hedge fund Elliott Management Corporation, which holds a 13.5% in Kabel Deutschland, has filed a lawsuit against the German cable operator over the price of its takeover by Vodafone Group last year. According to Reuters, Elliott has asked a court in Munich to order the company to give it access to a full report prepared by a special auditor which looked into the actions of Kabel Deutschland and Vodafone before and during their merger negotiations. At Kabel Deutschland’s annual meeting earlier this month, chief executive Manuel Cubero said the auditor had found that the offer price may not have been appropriate, an accusation denied by Cubero. Elliott said in a statement that shareholders have the right to access the report in its full, unredacted version and draw their own conclusions. A person familiar with Elliott’s thinking said, depending on the findings of the special auditor, the investor may take further action.

Vodafone officially announced its intention to acquire Kabel Deutschland for EUR7.7 billion (USD10.6 billion) and EUR3 billion of net debt in June 2013. After launching a voluntary public takeover offer, on 13 September 2013 Vodafone said that the 75% minimum acceptance condition had been met, and following European Commission approval, the transaction completed on 14 October 2013 with Vodafone holding 77% of the cableco’s share capital. However, in July 2014 Elliott and investment management firms Davidson Kempner and York Capital sued Vodafone for a higher compensation. The funds had tendered some of their shares to enable Vodafone to complete the deal. Elliott has asked for between EUR225 and EUR275 per share of Kabel Deutschland, notably higher than the EUR84.53 in cash that Vodafone had offered.

Germany, Kabel Deutschland, Vodafone Germany, Vodafone Group