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RNS Number : 4446J
Vodafone Group Plc
22 December 2020
22 December 2020
Vodafone announces Tender Offer for Kabel Deutschland minority
holdings
Vodafone Group Plc ("Vodafone Group") and its wholly-owned
subsidiary Vodafone Vierte Verwaltungs AG ("Vodafone KDG")
(together, "Vodafone") announce today a tender offer to all other
shareholders of Kabel Deutschland Holding AG ("KDG").
Vodafone will offer the KDG shareholders cash consideration of
EUR103 for each outstanding KDG share (the "Offer"). Vodafone has
received irrevocable undertakings from entities advised by the D.
E. Shaw group, by Elliott Advisers (UK) Limited ("Elliott") and by
UBS O'Connor LLC (together the "Accepting Shareholders") to accept
the Offer for all of their KDG shares, representing approximately
17.1% of the share capital of KDG. Following completion of the
Offer, Vodafone will own at least 93.8% of the outstanding share
capital of KDG.
The consideration for the shares of the Accepting Shareholders
in KDG who have given irrevocable undertakings is EUR1,557 million.
If all KDG minorities tender their shares, the consideration will
increase to EUR2,119 million. The cash consideration will be funded
from Vodafone's existing cash resources.
The Offer is beneficial to Vodafone and will:
-- be immediately accretive for both adjusted earnings per share and free cash flow per share;
-- be neutral to Vodafone Group's credit ratings; and
-- reduce Vodafone's exposure to ongoing legal proceedings related to the KDG acquisition.
The Offer compares to the current 30 day VWAP of EUR108 per
share.
Background to the Offer
Vodafone announced its intention to acquire KDG in June 2013 via
a voluntary public takeover offer. The offer settled and completed
in October 2013, with Vodafone owning 76.8% of KDG. Subsequently,
Vodafone entered into a domination and profit and loss transfer
agreement (the "DPLTA") in December 2013, taking effect on 1 April
2014, which allowed the integration of Vodafone Germany and
KDG.
Pursuant to the DPLTA, Vodafone undertook to pay to the minority
shareholders of KDG an annually recurring net compensation of
EUR3.17 per KDG share in cash. Vodafone also agreed, upon demand,
to purchase such minority shareholders' KDG shares for EUR84.53 per
share in cash (the 'Put Option'). In accordance with German law,
the Put Option price increases every year based on a formula of:
German base rate plus 5% less dividends paid. Consequently, the
current effective cost of funding for Vodafone is 4.12%, which is
significantly higher than its borrowing cost. The Put Option Price
as at 30 September 2020 was EUR92 per KDG share.
At the instigation of the KDG minority shareholders, the Munich
District Court (LG München 1) considered the adequacy of the
mandatory cash offer made to minority shareholders in Vodafone's
takeover of KDG. In November 2019, the Munich District Court (LG
München 1) ruled that the compensation Vodafone paid was "adequate"
given KDG's earnings potential based on an outlook set out by the
Board of KDG in November 2013. A number of KDG minority
shareholders appealed this decision, triggering an appeals process
which has now commenced and is expected to take several years to
complete.
Other relevant aspects in relation to the Offer
-- In considering the value of the Offer, Vodafone anticipated
the likely future guaranteed compensation payments to be made to
the minority shareholders in KDG, as well as the Put Option value
of the shares once the court process concludes and the risks and
expenses related to the legal proceedings. In accepting the Offer,
KDG shareholders will agree to waive their rights to any proceeds
resulting from the ongoing court process.
-- The acquisition of KDG shares from the Accepting Shareholders
who have provided irrevocable undertakings will increase Vodafone's
reported net debt as at 30 September 2020 from EUR44.0 billion to
EUR45.5 billion, increasing to EUR46.1 billion if all KDG
minorities tender their shares. The full minority shareholding in
KDG is already reflected as a liability in the rating agencies'
adjusted credit metrics, so the Offer is not expected to impact
Vodafone's current ratings.
-- For the purposes of the UK Listing Rules, Elliott is
considered to be a related party of Vodafone by virtue of its
shareholding in KDG exceeding 10%. As a result, Elliott's
irrevocable commitment to tender its KDG shares constitutes a
smaller related party transaction under LR 11.1.10 R.
-- As a result of the agreement to tender their shares in KDG to
Vodafone, the Accepting Shareholders will withdraw their appeal
from the court of appeal in Munich (Oberlandesgericht München).
Elliott has also agreed to certain confidentiality and other
restrictions, including commitments not to take further legal
action against Vodafone.
-- The Offer will be conditional on clearance under German foreign investment legislation.
-- The acceptance period will begin on 28 December 2020 and be
open until 1 February 2021. There will be no additional acceptance
period.
-- The German offer document will together with an English
convenience translation be published on the following website:
https://investors.vodafone.com/individual-shareholders/KDG-offer
- ends -
For more information, please contact:
Investor Relations Media Relations
Investors.vodafone.com Vodafone.com/media/contact
ir@vodafone.co.uk GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No. 1833679
About Vodafone Group
Vodafone is a leading telecommunications company in Europe and
Africa. Our purpose is to "connect for a better future" and our
expertise and scale gives us a unique opportunity to drive positive
change for society. Our networks keep family, friends, businesses
and governments connected and - as COVID-19 has clearly
demonstrated - we play a vital role in keeping economies running
and the functioning of critical sectors like education and
healthcare.
Vodafone is the largest mobile and fixed network operator in
Europe and a leading global IoT connectivity provider. Our M-Pesa
technology platform in Africa enables over 45m people to benefit
from access to mobile payments and financial services. We operate
mobile and fixed networks in 21 countries and partner with mobile
networks in 48 more. As of 30 September 2020, we had over 300m
mobile customers, more than 27m fixed broadband customers, over 22m
TV customers and we connected more than 112m IoT devices.
We support diversity and inclusion through our maternity and
parental leave policies, empowering women through connectivity and
improving access to education and digital skills for women, girls,
and society at large. We are respectful of all individuals,
irrespective of race, ethnicity, disability, age, sexual
orientation, gender identity, belief, culture or religion.
Vodafone is also taking significant steps to reduce our impact
on our planet by reducing our greenhouse gas emissions by 50% by
2025 and becoming net zero by 2040, purchasing 100% of our
electricity from renewable sources by 2025, and reusing, reselling
or recycling 100% of our redundant network equipment.
For more information, please visit www.vodafone.com , follow us
on Twitter at @VodafoneGroup or connect with us on LinkedIn at
www.linkedin.com/company/vodafone .
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