Friday 24 November 2017

Vodafone urges Kabel shareholders to accept $10bn bid

Vodafone has confirmed it is in 'advanced discussions' to dispose of its interest in Verizon Wireless
Vodafone has confirmed it is in 'advanced discussions' to dispose of its interest in Verizon Wireless

VODAFONE urged Kabel Deutschland shareholders to accept its €7.7bn offer, warning the bid would lapse if less than three quarters of them agree to sell Germany's largest cable operator by Wednesday.

Earlier on Monday the Financial Times said the British mobile network operator may fail to reach the 75pc acceptance threshold, citing anonymous shareholders.

Vodafone, which last week agreed the sale of its share in U.S. operator Verizon Wireless for $130bn, wants to buy Kabel Deutschland to offer more television and fixed-line services in Germany, its largest European mobile market.

If the deal collapses, Vodafone would be left relying on an agreement to rent fixed lines from Deutsche Telekom, rather than owning its network. It also faces the risk of Kabel Deutschland becoming an aggressive competitor in mobile phones, analysts said.

"There will not be any additional acceptance period should the 75pc acceptance condition not be met by Wednesday, 11 September," Vodafone said on Monday.

Vodafone said that by Friday evening it had secured the support of holders of 11.86pc of Kabel Deutschland, which operates Germany's biggest cable network. That includes 4.27pc of Kabel Deutschland shares Vodafone and a person that acts jointly with the group already owned.

In acquisitions, however, shareholders generally wait until the deadline to tender their shares in case a last-minute rival bid emerges.

Kabel Deutschland shares were down 0.9pc at €84.97 in mid-morning trade,  just above Vodafone's offer. Trading volumes in the shares were more than double those in the FTSE 300 and the German blue chip index.

Vodafone agreed a €84.5 a share offer for Kabel Deutschland in June, a near 40pc premium to Kabel's share price before the British company's interest first emerged.

One of Kabel Deutschland's 30 largest shareholders said on Monday he expected the deal to go through.

"Shareholders are unlikely to get a better deal for their shares in the next three to four years. Vodafone and Kabel D. can unlock high synergies from the joint utilisation of networks and a counter-bid is unlikely."

He said Kabel's biggest rival in Germany, Liberty Global , was unlikely to make a counter offer after antitrust-clearance for its 2012 acquisition of Kabel Baden-Wuerttemberg was verturned by a regional court last month.

Espirito Santo analyst Andrew Hogley said there was a risk that the Kabel Deutschland deal would fail, although on balance he expected it would go through, even if Vodafone had to reduce the acceptance threshold slightly.

"Kabel Deutschland on a standalone basis on our numbers is worth about €84, so it's a fair price that Vodafone is offering but given the synergies they are claiming from the deal, it is not compelling," he said.

Vodafone said on Monday that Germany's Federal Cartel Office had confirmed it would not request a referral from Europe on the deal.

It also said the European Commission was expected to complete an initial review of the offer by Sept. 20.

Activist shareholder Paul E. Singer, founder of Elliott Management, last month raised his stake in Kabel Deutschland to 5.1pc, making him the company's largest shareholder.

Singer, who declined to comment, runs hedge fund, Elliott Management, which is known for its battle for control over U.S. oil firm Hess Corporation earlier this year.


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