Vodafone Group (LON: VOD) Unveils Tender Offer for Kabel Deutschland Minority Holdings

Summary

  • Vodafone Group along with its wholly owned subsidiary Vodafone KDG announced a tender offer for Kabel Deutschland Holding AG.
  • Last year, Elliott and other minority holders had claimed that Vodafone had underpaid for its purchase in KDG.
  • The adjusted EBITDA for 2021 is expected to be in the range of €14.4 billion-€14.6 billion.

Europe’s largest mobile and fixed network operator Vodafone Group Plc (LON: VOD) along with its wholly owned subsidiary Vodafone KDG announced a tender offer to all other shareholders of Kabel Deutschland Holding AG.

According to the offer made by Vodafone Group, KDG shareholders would be entitled to receive cash consideration of €103 for each outstanding KDG share. D.E. Shaw group, owned by Elliott Advisers (UK) Ltd. and UBS O'Connor LLC, which together have a 17.1 per cent stake in KDG, has already committed to accept the tender offer put forward. Last year, Elliott and other minority holders had claimed that Vodafone had underpaid them for its KDG purchase and they lost a court challenge.

If the deal is successful, Vodafone Group may own at least 93.8 per cent of the outstanding share capital of KDG. At present, it owns 76.8 per cent of KDG. In case all the shareholders of KDG accept the tender offer, the final amount will sum up to €2,119 million that will be funded from Vodafone Group’s existing cash reserves. However, the group’s net debt might go up to €46.1 billion if all KDG shareholders decide to tender their shares.

In June 2013, Vodafone Group, via a voluntary public takeover offer, announced its intention to acquire KDG. By October 2013, the offer was completed and settled.

How will Vodafone benefit

From an investor’s perspective, Vodafone Group could witness growth in its free cash flow per share and adjusted earnings per share immediately after the offer is finalised. However, the credit rating of the leading telecom giant would not be impacted. In addition, the KDG acquisition could help the telecom company in reducing its exposure to ongoing legal proceedings.

Also read: How One Should Be Looking at Telecom Shares as Vodafone (LON: VOD) Keeps Paying Out Dividend?

Vodafone Group bolstering its global network

In November, the telecom company stated that Vodafone Egypt had bagged 40 MHz of 2.6 GHz TDD spectrum from the NTRA (National Telecommunications Regulatory Authority), with an preliminary payment of US$270 million (€230 million) along with two further payments of US$135 million due in 2021 and 2022, respectively. The group seeks to expand its network capacity and licence term through to 2030.

Vodafone Group made a profit of €1.6 billion during the first half of 2021. The board had also announced the interim dividend of 4.5 euro cents, which was the same as in the corresponding previous year and will be paid on 5 February.

In recent times, the company has launched 5G services in several European cities, and nearly 52 million homes were facilitated with broadband speeds of up to 1 Gigabit. Given the current macroeconomic scenario, the adjusted EBITDA for 2021 is expected to be in the range of €14.4 billion-€14.6 billion, of which the company has already reported an adjusted EBITDA of €7.0 billion during the first half of 2021.

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