Vodafone Wins Shareholder Support For Kabel Acquisition

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Vodafone got enough shareholder approval for its acquisition of Germany’s largest cable operator

Vodafone has confirmed that it has gained enough votes for its acquisition of Kabel in Germany to proceed.

This comes after last minute concern that it might lack shareholder support, prompting speculation that the deal was in very real danger of collapse.

Shareholder Approval

Vodafone told TechweekEurope that it has now received a 75 percent acceptance from Kabel Deutschland Holding shareholders.

Vodafone-logoAs it declared victory, Vodafone said it would not know the exact proportion of support its bid received until Monday next week.

“…The 75 percent minimum acceptance condition has been met. Vodafone will publish a final announcement with the definitive tender ratio on 16 September 2013,” the company said in an emailed statement.

And Vodafone said that those Kabel shareholders who had not accepted the offer within the acceptance period may still accept the offer by 30 September 2013.

“After completion of the Offer, Vodafone intends to initiate and pass a resolution at the general meeting of KDH shareholders with regard to the execution of a domination and profit and loss transfer agreement with KDH pursuant to sections 291 et seq. of the Stock Corporation Act,” Vodafone said.

Deal Tensions

The acceptance of the deal is a success for Vodafone’s management team, after last minute doubts that it might not gain the necessary shareholder support.

Vodafone had set a deadline of midnight on Wednesday to gain the 75 percent shareholder approval, but as of Tuesday morning, Vodafone only had 20 percent shareholder approval, up from 12 percent last Friday.

However in some acquisition transactions, shareholders wait until the last possible moment before giving their blessing, in the hopes that a rival bid will emerge. Yet in this deal Vodafone also had to contend with Elliott Capital, a US hedge fund led by Paul Singer. Singer was reportedly unhappy with Vodafone’s deal, and wanted the British operator to raise its offer.

Singer had raised his Kabel stake to 11 percent ahead of the Vodafone deal. It is not known at this time whether Singer has agreed to the deal, and reportedly under German law, Singer still has the option to sue Vodafone in order to extract a higher price.

Quad play And backhaul

Vodafone first confirmed its interest in Kabel back in early June. And then later that same month, it was announced that it had beaten off its rival Liberty Global, which was unable to match Vodafone’s offer of €7.7 billion (£6.6bn) for the cable operator.

The deal, once it is completed, should grow Vodafone’s customer base by 8.5 million and give it the necessary infrastructure and networks to offer a so-called “quad-play” service in Germany, including mobile phone, home broadband, home telephone and television, all from a single provider.

Despite its struggles in the highly-competitive German market, Vodafone is looking to ramp up its service offerings in the country, and the Kabel deal would allow it to acquire its own backhaul capability in that market.

It did a similar thing in the UK last year after it acquired the struggling UK telecoms company Cable & Wireless Worldwide (C&WW) for £1 billion.

Kabel was founded as a spin-off from Deutsche Telecom in 1999, and is the largest cable television operator in Germany. It offers around 100 Pay TV channels, fibre broadband and landline phone services.

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Author: Tom Jowitt
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