Vodafone Group Plc (VOD)’s 7.7 billion-euro ($10.2 billion) bid for Kabel Deutschland Holding AG (KD8) cleared a major hurdle by winning the backing of at least 75 percent of the German company’s shareholders.
The minimum threshold for the takeover to go through was met by the Sept. 11 deadline, Newbury, England-based Vodafone said yesterday, without giving detailed results of the tender. Kabel Deutschland investors who haven’t given up their stock will get a second chance, from Sept. 17 to Sept. 30.
Kabel Deutschland is a key part of Vodafone’s expansion strategy as the carrier looks for ways to boost revenue and lock in customers with Internet and television offers in addition to wireless service. Kabel Deutschland is the biggest cable company in Germany, Vodafone’s largest market, and had drawn a rival bid from John Malone’s Liberty Global Plc. (LBTYA)
The acquisition had been threatened by investors who held on to their shares in anticipation of getting a bigger payout. Elliott Management Corp., the company run by billionaire Paul Singer, accumulated shares to become Kabel Deutschland’s biggest stakeholder with a 10.9 percent holding in the days leading up to the deadline.
The hedge fund wanted to take advantage of a German law that often requires a buyer that gets at least 75 percent of a target’s shares to offer more money to hold-outs, a person familiar with the matter has said, asking not to be identified discussing private deliberations.
Kabel Deutschland rose 3.5 percent to 89.40 euros at 9:08 a.m. in Frankfurt. Vodafone’s 87-euro-per-share offer price includes a 2.50-euro dividend payment. Vodafone added 0.3 percent to 210.65 pence on the London exchange.
Vodafone said it plans to publish detailed results of the tender on Sept. 16. It anticipates an initial regulatory review by the European Commission to be completed by Sept. 20.
The deal is wrapping up as Vodafone agreed this month to sell its most valuable asset, its 45 percent stake in U.S. mobile-phone company Verizon Wireless, for $130 billion to Verizon Communications Inc. It’s the biggest M&A transaction in more than a decade and puts Vodafone’s center of gravity firmly in Europe.
Vodafone will have about $30 billion in cash left over from the Verizon sale to reduce debt, make acquisitions and build its broadband Internet and faster, fourth-generation mobile networks. Project Spring, as the effort has been named, will add about $10 billion to local units’ budgets over the next three years.