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Kabel Deutschland shareholders fear Vodafone tender shortfall

September 9, 2013

By Colin Mann

Shareholders in Kabel Deutschland have expressed concern that Vodafone’s bid for the German cable MSO could fail if the minimum 75 per cent acceptance level is not reached by this Wednesday in the first part of a two-stage tender process, reports the FT. Kabel Deutschland shareholders must tender their shares by this date.

Some of Kabel Deutschland’s shareholders fear that the amount of tenders offered will fall well short of this goal. The shareholders say that Vodafone still has time to reduce the requirement ahead of the Wednesday deadline but that failure to do so could derail the deal.

One major shareholder has suggested that the total number of shares tendered in the first phase, including those owned by the bidder, has averaged just 68.5 per cent. Another shareholder has also expressed fears that tenders will fail to reach the required minimum which, at 75 per cent, it says has been set higher than for similar recent deals.

A major concern is the large number of index-tracking investors in Kabel Deutschland – representing some 10 per cent of the MSO’s shareholder base. Shareholders suggest that such funds are unlikely to tender their shares in the first wave, preferring to wait until the second tender deadline, thereby giving their investors exposure to Kabel Deutschland for as long as possible.

Should Vodafone fail to garner the necessary support, it can be prevented from relaunching a further takeover offer for 12 months although it can seek a waiver from BaFin, Germany’s market regulator.

Vodafone said that there would be no change to the conditions set out in its July announcement which set out all the terms for the tender offer, including the 75 per cent goal for Wednesday September 11.

In a regulatory and financial communication, Vodafone said: “Vodafone reminds all shareholders in Kabel Deutschland Holding AG (“KDH”) that the acceptance period of the voluntary public takeover offer (the “Offer”) for KDH by Vodafone Vierte Verwaltungs AG (formerly Vodafone Vierte Verwaltungsgesellschaft mbH), a subsidiary of Vodafone Group Plc (“Vodafone”), ends on Wednesday, 11 September 2013, 24.00 hours (Frankfurt am Main local time). Accordingly, Vodafone urges all shareholders who have not tendered to date to do so as the Offer will lapse if the 75% minimum acceptance condition is not met by then. There will not be any additional acceptance period should the 75% acceptance condition not be met by Wednesday, 11 September 2013.”

“Please note that financial intermediaries, custodian banks or brokers may have individually set earlier deadlines for their receipt of acceptance instructions in order to process these properly and in time. Vodafone, therefore, advises KDH shareholders to contact their financial intermediaries, custodian banks or brokers as soon as possible to clarify the applicable deadline by which tender instructions need to be submitted,” it continued.

“Vodafone confirms that all terms and conditions of the Offer remain unchanged and will not be amended, including inter alia the Offer price and the minimum acceptance condition for the Offer of 75%,” it advised.

Vodafone said that KDH shareholders who had not yet accepted the Offer could tender their shares for the Offer price of €84.50 per KDH share in cash. If the settlement of the Offer occurs prior to the day on which the general meeting of KDH shareholders resolves on the €2.50 proposed dividend for the financial year ending 31 March 2013, the Offer consideration will automatically be increased by €2.50 per KDH share to €87.00 per KDH share.

In terms of regulatory clearance, Vodafone pointed out that Germany’s Federal Cartel Office (Bundeskartellamt) (“FCO”) confirmed to Vodafone that it would not request the European Commission to refer the Offer to the FCO for its approval, and the deadline for making such request expired on Friday, 6 September 2013. The Commission is expected to complete its Phase I review of the Offer by Friday, 20 September 2013.

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