Vodafone wins shareholder support over $10.2 billion bid for Kabel Deutschland

The 7.7 billion euros ($10.2 billion) takeover of Kabel Deutschland by Vodafone won shareholder support when votes in favor of the deal passed a crucial 75% minimum on Thursday night.
The lengthy process of collecting and verifying shareholder votes for the deal meant that there was still uncertainty over whether Vodafone would buy the German cable group even after a Wednesday night deadline.

Kabel Deutschland is a key part of Vodafone’s expansion plan as the wireless carrier looks for ways to boost revenue and lock in customers with Internet and television offers in addition to wireless service. Kabel Deutschland is the biggest cable company in Germany.

The acquisition process has been threatened by investors hopes of getting bigger payout. Elliott Management Corp., the company run by billionaire Paul Singer, accumulated shares to become Kabel Deutschland’s biggest stakeholder with a 10.9 percent holding in the days leading up to the deadline. The hedge fund saw an opportunity to take advantage of a German law that often requires a buyer that gets at least 75% of a target’s shares to offer more money to hold-outs, a person familiar with the matter has said, asking not to be identified.

Vodafone is in line for a huge payout once the $130 billion deal to sell its stake in Verizon Wireless in the US completes early next year. Part of this windfall will be used to cover the acquisition of Kabel Deutschland, although Vodafone will still be left with a large capability for further potential similar acquisitions even after a large payment to shareholders.

The announcement by Vodafone late on Thursday that it had won a sufficient level of approval for the deal will be welcomed by shareholders in Kabel Deutschland, who had also questioned the motives of Elliott Capital Advisors, the US hedge fund that more than doubled its stake in the company to 10.9% last week.

It is still not clear how the fund manager voted in the process. Many investors believe that Elliott, the largest shareholder in Kabel Deutschland, will have had to sell at least some of its shares for the 75% hurdle to have been passed. Elliott declined to comment.

Vodafone is up half percent in London trading session today. Kabel Deutschland jumped by 4.6%.