13th Jan 2015 15:22
LONDON (Alliance News) - Activist investor Elliott Advisors, which has a 13.5% interest in Kabel Deutschland, Tuesday demanded that the German company hold an extraordinary general meeting, claiming that special auditors had found that Kabel's own internal valuation of its worth was higher than the takeover price it had accepted from Vodafone Group PLC.
The report, which was published by Kabel Deutschland last December, found that the internal enterprise valuation carried out by Kabel Deutschland and its investment banks was significantly higher than the price offered by Vodafone during the takeover, Elliott said, and in light of this, the joint statement from Kabel Deutschland's management and supervisory boards to recommend Vodafone's EUR84.50 offer price "is implausible."
Elliot added that the findings conclude that the Kabel Deutschland management board "has presumably neglected to inform the supervisory board of the higher internal enterprise valuations."
"The findings of the special auditor's report contain troubling allegations that pertain to the fair valuation of KDG and to breaches of duty by the company's management and supervisory boards," Elliott said in a statement.
Elliott is demanding that Kabel Deutschland explains the reports findings in connection with the takeover.
"Elliott has informed KDG that it expects the EGM to be convened without delay. Should KDG refuse to comply with the request to convene the EGM, Elliott will call upon a court to empower it to convene the EGM itself," it said.
Elliott is proposing a further special audit to further examine the management's behaviour in connection with the takeover by Vodafone, including the period after March 31, 2013 which was not included in the special auditor's report. It is suggesting that the team responsible for the first special audit, Martin Schommer of Constantin GmbH, perform the new audit.
Additionally, it has proposed that there should be an additional special auditor to independently look at "possible breaches of duty by the KDG management board regarding alleged obstructions of the special auditor in the course of the first special audit."
"If KDG and Vodafone acted in accordance with the law before and during the takeover, then it should be in their own best interest to support a new special audit covering the period after March 31, 2013 and clear up the severe allegations raised in the report," Elliott said.
Vodafone agreed to buy Kabel Deutschland for EUR7.7 billion, or EUR87 per share last June. It completed the deal in October, after getting 76.57% of Kabel, and has begun integrating it. Later that month, Elliott sued Kabel Deutschland over its initial refusal to provide a special auditor's report into the deal.
Shares in Vodafone are trading up 1.2% 229.50 pence Tuesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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