Paulson Hedge Fund Adds to Merger Play Raising Vodafone

Paulson & Co., the $18 billion hedge-fund firm run by billionaire John Paulson, increased his bet that Vodafone Group Plc may be a takeover candidate by raising its stake in the phone company.

The New York-based firm, added 17 million American depositary receipts of Vodafone last quarter, bringing its holding to 20 million ADRs valued at $703.6 million as of Sept. 30, according to a regulatory filing today. Paulson also increased its stake in T-Mobile US Inc., adding 2.76 million shares and bringing the total value of its holding to $504.7 million.

AT&T Inc. executives are laying the groundwork internally for a potential takeover of Vodafone next year, mapping out a strategy for a complex deal with Europe’s largest mobile carrier, people familiar with the situation said this month. Paulson has previously said he considers Vodafone a takeover candidate.

Paulson & Co. bought 5.6 million shares of Mallinckrodt Plc, joining Jana Partners LLC in buying a new stake in the former pharmaceutical business of Covidien Plc that spun off to become a stand-alone company in June. Jana, in a letter to investors earlier this month, said the company has two drugs that are in “very late stages” of the U.S. Food and Drug Administration’s approval process. It didn’t say whether it will push for changes at the company.

FedEx Stake

Paulson’s firm joined activist investor Daniel Loeb and billionaire George Soros in buying shares of FedEx Corp. in the third quarter. The firm bought 646,800 shares of the operator of the world’s largest cargo airline.

Loeb, who has pushed for change at companies including Sony Corp., said earlier this week his Third Point LLC took a stake in FedEx, which is in the midst of a $1.7 billion restructuring program to lower costs and boost earnings with steps such as cutting air capacity to Asia, retiring older planes and offering employee buyouts.

Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

Armel Leslie, a spokesman for Paulson & Co. with WalekPeppercomm, declined to comment on the filing.

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