Vodafone settles long-running KDG dispute for €2.1 billion

In an attempt to finally end its legal differences with Elliot Management, Vodafone Group has made an offer worth €2.1 billion ($2.6 billion) to minority shareholders in Kabel Deutschland (KDG), seven years after acquiring the German operator.

Vodafone has been embroiled in a long running lawsuit with the remaining shareholders since the takeover in 2013.

The telco currently holds about 77% of KDG. At the time of the sale, Elliot Management had refused to sell its holding, having only recently become the telcos largest shareholder, saying the price wasn't high enough.

What followed was an agreement where Vodafone was able to continue with their integration plans, but was forced to pay compensation to the remaining shareholders. This amounted to €3.17 per share annually in cash, with a buyout price set at €84.53 per share, increasing annually.

In with the new

The new deal will see Vodafone hand over €103 per share, according to a statement. This would mean the operator would end up with a minimum 94% of the remaining shares.

Investors advised by DE Shaw, Elliott Advisors and UBS O’Connor have accepted the offer for their combined 17.1% stake, worth €1.56 billion.

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The offer should bring legal proceedings to a halt. Elliott and other minority holders in KDG lost the latest court challenge in 2019 over claims Vodafone had underpaid for the operator. They were in the process of appealing, but have now agreed to withdraw, with no further legal action planned.

The takeover was key in helping Vodafone move towards being a service provider rather than operator in the German market, confirmed by its subsequent €18.4 billion euro acquisition of Liberty Global’s German and eastern European cable business in 2019.

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Fiona Graham, Editorial Director, Light Reading

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