Vodafone faces pressure to raise $10 billion Kabel bid: sources

Mon Sep 9, 2013 12:14pm EDT
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By Harro Ten Wolde and Arno Schuetze

FRANKFURT/LONDON (Reuters) - Vodafone is facing pressure from Kabel Deutschland's largest shareholder to raise its 7.7 billion euro ($10.1 billion) offer for Germany's largest cable company, two sources familiar with the situation said.

Activist investor Paul E. Singer, founder of U.S. hedge fund Elliott Asset Management, more than doubled his stake to 10.9 percent on September 6, Kabel Deutschland said on Monday two days before shareholders have to decide whether to accept Vodafone's offer.

"Vodafone's offer is not ideal. The goal is to renegotiate terms," a person familiar with the hedge fund's thinking said.

A spokeswoman for Elliott, known for its battle for control of U.S. oil firm Hess Corporation earlier this year, declined to comment.

A person familiar with Vodafone said Elliott was building up its stake in an attempt to force a better deal.

Vodafone urged Kabel Deutschland shareholders to accept its 84.5 euro a share offer earlier on Monday and warned the bid would lapse if the holders of less than three quarters of the German company's shares agree to sell by Wednesday.

The British company, which last week agreed the sale of its share in U.S. operator Verizon Wireless for $130 billion, wants to buy Kabel Deutschland to offer more television and fixed-line services in Germany, its largest European mobile market.

If the deal were to collapse, Vodafone would have to rely on renting fixed lines from Deutsche Telekom, rather than owning its network. It also faces the risk of Kabel Deutschland becoming a competitor in mobile phones, analysts said.   Continued...

The logo of German cable television group Kabel Deutschland is pictured on the company's headquarters in Unterfoehring north of Munich June 24, 2013. REUTERS/Michaela Rehle