Vodafone faces Kabel Deutschland price probe at EGM

Kabel Deutschland investor Elliott Management Corp on Tuesday explained its decision to call for an extraordinary general meeting (EGM) to discuss Vodafone's 2013 takeover of the German cable operator.

In a statement sent to Bloomberg, Elliott Management said it wants to hold the meeting to clarify whether Kabel Deutschland's management and supervisory boards failed in their duty when brokering the sale, and whether Kabel Deutschland was undervalued as a result.

The investment company explained that it wants to air the allegations against Kabel Deutschland's bosses, which were raised in a special auditor's report published in December. The EGM would give management the chance to explain why the report claims the company was undervalued, Elliott Management stated.

Vodafone paid €7.7 billion ($9 billion) for Kabel Deutschland in a deal that was completed in September 2013. The special auditor's report claims the cable company was undervalued by as much as 25 per cent, Reuters reported.

Kabel Deutschland on Monday revealed it had received the request for an EGM during which investors would be able to view the special auditor's report, and decide on whether to appoint an independent auditor to further probe the takeover deal. The company states the EGM will be used to "detect alleged breaches of duty by members of the Company's boards in connection with the executed special audit."

The company said it would invite shareholders to the meeting if legal conditions for it are met, and has not yet given an indication on when the EGM may take place.

Elliott Management holds a 13.5 per cent stake in Kabel Deutschland, Reuters reported citing Thompson Reuters data.

In October 2014 the investment company issued a lawsuit against Vodafone demanding access to the special auditor's report, which had been ordered at Kabel Deutschland's 2014 AGM amid dissatisfaction at the sale price, Reuters reported at the time.

Vodafone Germany launched its first combined cable and DSL broadband service in May 2014, a moment CEO Jens Schulte-Bockum hailed as a "new chapter" for the company. The operator is preparing to begin offering converged services covering mobile and fixed broadband services this year.

For more:
- see this Bloomberg article
- view Kabel Deutschland's statement
- read this Reuters report
- view this previous Reuters article

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