Hedge fund Elliott Management Corp may receive a boost in its bid to receive a higher amount for its stake in Kabel Deutschland, after an independent auditor’s review found that Vodafone underpaid for the cable assets last year. Kabel Deutschland was…
Hedge fund Elliott Management Corp may receive a boost in its bid to receive a higher amount for its stake in Kabel Deutschland, after an independent auditor’s review found that Vodafone underpaid for the cable assets last year.
Kabel Deutschland was worth 23% more than the €7.7bn the German cableco’s management agreed to sell the company for, according to German auditor Constantin.
The auditor was commissioned to conduct the report by Kabel Deutschland after Elliott filed a court motion. The hedge fund is suing the cableco arguing that its management should have demanded more from Vodafone.
The auditor said Kabel Deutschland shares were worth €104 apiece – higher than the €84.53 per share price the UK company paid.
Elliott more than doubled its stake in Kabel Deutschland in September 2013, taking its holding beyond 10%, a week before the acceptance period deadline. That led to speculation that the fund would seek a higher price at a later date.
Vodafone has pointed out that Kabel Deutschland’s board unanimously recommended its offer at the time and 76.6% of shareholders initially tendered their shares.
Vodafone disputed both Constantin’s report and Elliott’s arguments. In a statement, the company said: “The Elliott-proposed special auditor’s conclusions on a theoretical Kabel Deutschland takeover price are unrealistic. Vodafone’s offer which was a 51% premium to the undisturbed weighted average theoretical Kabel Deutschland share price was recommended by theoretical Kabel Deutschland’s boards taking into account the views of their investment banking advisers. The offer was accepted by the overwhelming majority of KD shareholders.
“Under the domination agreement, an independent auditor attributed a value of €75.76 per share and a volume weighted average share price of €84.53 per share. These values have been explicitly confirmed by a court-appointed – and therefore independent – auditor.”
