It seems Paul Singer’s sudden and exuberant buying of Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) has failed to impress Vodafone Group Plc (NASDAQ:VOD) (LON:VOD), as the British telecom company has reiterated its offer and said that it will not raise the bid or extend deadlines. Elliott Management pushed up its position in Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) from 5.1% to 10.9% of shares, according to a filing on Sep 9.
Vodafone set September 11 as deadline for Kabel
This was a huge position, which is especially of note in the context that Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) had set Sept. 11 as the deadline for Kabel’s shareholders to tender their holdings. Elliott amassing a major stake when Vodafone was aleady facing trouble in reaching the 75% consensus shareholder acceptence level points to the hedge fund trying to pressure the British telecom company into raising its offer, which stands at 87 euros per share.
The deadline to tender shares of Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) is 6 pm EST today. According to an earlier statement from the company, Vodafone has gained the approval of only 20% of the shareholders.
In a piece published in NYT Dealbook today, Quentin Book concludes that Elliott Management and Davidson Kempner’s close to 15% position in the company will not budge Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) into raising its bid. The offer by Vodafone gave a 40% premium to Kabel’s pre-offer share price—if Vodafone fails to gain the approval of shareholders, the stock could plummet easily to its earlier price of $70 and everyone stands to lose.
Vodafone misses a chance to strengthen its position in Europe
Not only will Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) miss the chance to strengthen its position in Europe but Kabel Deutschland will also miss out on the best offer in the market. If the deal fails to get through, Elliott stands to lose on its holding, which is currently valued at $819 million euros. Vodafone, on the other hand, cannot afford to sweeten the deal even if wants to—for one thing the offer is already pricey, moreover if it lowers the 75% acceptence level, it will fail to enact the domination agreement to integrate the company in Germany, writes Book.
Book goes on to speculate on the possibility that Elliott could choose to tender some part of its holding and hold out on the rest and then fight in court over valuation in case Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) tries to gain 100% control. Book says that could be a long winded battle even for Elliott, however we have seen Elliott show remarkable resilience in the Argentine holdout creditors case, so one never knows.
SocGen rates Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) at Hold, and says that despite its higher potential the company has continued to lag peers like, Ziggo NV (AMS:ZIGGO), UnityMedia which is owned by John Malone’s Liberty Media Corp (NASDAQ:LMCA) and Telenet Group Holding NV (EBR:TNET), in terms of broadband penetration.