Anxious day for Vodafone as Kabel Deutschland deadline looms

Tensions will be running high at Vodafone as the operator waits for shareholders to tender their shares in Kabel Deutschland by the deadline of midnight on Wednesday, Sept. 11, amid pressure from an activist fund manager.

Reuters reported that Vodafone has so far secured almost 20 per cent of Kabel Deutschland, and needs to reach at least 75 per cent to assure its €7.7 billion ($10.2 billon) takeover of the German cable operator, thereby bolstering its strategy of offering more TV and fixed-line services in its largest European market. However, the operator's offer will lapse if the threshold is not reached in time.

At the same time, the operator is under pressure from U.S. activist investment fund manager Paul Singer and his company Elliott Management Corp.--which said it has 10.9 per cent stake in Kabel Deutschland--to raise its offer. Vodafone is currently refusing to do so, Reuters said.

Bloomberg reported that Elliott Management is hoping to benefit from a German law that often requires a buyer that gets at least 75 per cent of the target's shares to offer more money to hold-outs after securing a so-called domination and profit-transfer agreement. In other words, the fund manager wants to secure a higher price in order to be "squeezed out" at a later date.

Meanwhile, unnamed sources told Bloomberg that the recent sale of Vodafone's 45 per cent stake in Verizon Wireless for $130 billion gives the UK operator some options if the Kabel Deutschland deal fails, including the possible acquisition of John Malone's Liberty Global. Vodafone is also believed to be interested in Fastweb in Italy and Ono in Spain.

For more:
- see this Reuters article
- see this Bloomberg article
- see this FT article (sub. req.)

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