Elliott Management Slaps Vodafone With Another Lawsuit

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Elliott Management Corporation is not giving up its Kabel Deutschland Holding AG (ETR:KD8) (OTCMKTS:KBDHF) shares to Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) for just 84.53 euros each without a fight. The American hedge fund announced on Tuesday that it had filed another lawsuit against Vodafone over the price of the UK-based group’s acquisition of German cable firm Kabel Deutschland. 

Elliott, which has a 13.5% stake in Kabel Deutschland, said it had requested a Munich court to order the firm to provide a full copy of a report prepared by a special auditor. Kabel Deutschland has already already agreed to provide a copy of the report that has had sensitive information redacted.

At the firm’s annual meeting a couple of weeks ago, Kabel Deutschland Holding AG (ETR:KD8) (OTCMKTS:KBDHF) CEO Manuel Cubero said the auditor had noted that the offer price may not have been appropriate. Cubero, however, denied the auditor’s conclusion.

In its initial court filing this summer, Elliott asked for between 225 and 275 euros per share of Kabel Deutschland, nearly three times the 84.53 euro cash offer from Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD).

Statement from Kabel Deutschland

“Kabel Deutschland has found information which is contained within the report that is data sensitive, i.e. personal data of employees, or commercially sensitive. Consequently, Kabel Deutschland will today convey these points to the Special Auditor,” the company wrote in a statement. “We expect the Special Auditor to react accordingly and then Kabel Deutschland Holding AG (ETR:KD8) (OTCMKTS:KBDHF) will send this report to any shareholder that requests it.”

Elliott Management may call special meeting

A person familiar with Elliott Management’s plans said that the firm will take additional steps based on the details of the auditor’s report.

Possible steps include demanding that Kabel Deutschland hold an extraordinary general meeting, which is a possibility as Elliott owns more than 5% of the company.

The hedge fund said in a statement that shareholders have the right to access Kabel Deutschland Holding AG (ETR:KD8) (OTCMKTS:KBDHF) report in its full, unredacted version and make their own conclusions: “What is in the report that the company doesn’t want shareholders to see?” the statement asked.

Elliott Management is having a good year as many hedge funds struggle in 2014. According to an investor letter reviewed by ValueWalk, the hedge fund is up 2.4% in September and 6.6% for the year. Paul Singer’s fund now manages close to $25.5 billion.

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