Pressure on Vodafone as investors pile into Kabel stock

 
Oliver Smith
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VODAFONE is under increasing pressure to change the terms of its €7.7bn (£6.5bn) purchase of Kabel Deutschland ahead of tomorrow’s deadline, as it was revealed yesterday that shareholders have increased their stake in the company.

The German telecoms operator said yesterday that Paul E Singer, of Elliott Asset Management, has increased his holdings in the company to 10.9 per cent, while Barclays and Davidson Kempner Capital also raised their stakes.

Vodafone offered $87 a share to Kabel Deutschland shareholders in July, but needs 75 per cent of shares to be tendered by tomorrow for the deal to go ahead.

“There will not be any additional acceptance period should the 75 per cent acceptance condition not be met by Wednesday,” Vodafone said in a statement yesterday.

Vodafone has said that by yesterday only 11.86 per cent of shares in Kabel Deutschland had been tendered ahead of the deadline, but said it would not lower the requirement.

Analysts say shareholders may be trying to force Vodafone to raise its share offer, drop its 75 per cent requirement, or stop the deal in hopes of a counterbid.

“In the context of the synergies created by the deal that Vodafone was claiming, they’re not paying the value to Kabel Deutschland shareholders,” said Andrew Hogley analyst at Espirito Santo.

But shareholders may also be upping their stake to retain holdings in Kabel Deutschland after the deal, he added.

“Some shareholders might see the opportunity to stay in a listed minority, they want Vodafone to get control and push the synergies into Kabel Deutschland, but want to remain in the minority.”

Barclays, David Kempner Capital and Elliott Asset Management did not comment.