LONDON (Alliance News) - Activist investor Elliott Advisors, which has a 13.5% interest in Kabel Deutschland, Monday called for a Munich regional court to appoint two special auditors and conduct two additional audits of the company in connection with its takeover by Vodafone Group PLC.
A special auditors report, which was published by Kabel Deutschland last December, had 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, according to Elliott.
Elliott had proposed that Martin Schommer of Constantin GmbH, who conducted the first audit, conduct an additional audit covering the period after March 31, 2013 to allow it to continue to look independently at possible breaches of duty by the Kabel Deutschland management board, and called for the appointment of a second special auditor to examine alleged obstructions during the course of the first audit.
However, at Kabel Deutschland's extraordinary general meeting Monday, Elliott's proposals were voted down by the voting majority of Vodafone, it said, although more than 20% of the attending shareholders voted in favour of additional audits.
"From Elliott's point of view, the result of the voting shows that the vast majority of minority shareholders, not just Elliott, have a justified interest in a thorough investigation of the first report's findings," Elliott said.
"As was to be expected, the management of Kabel Deutschland and the majority shareholder Vodafone are obviously not interested in clearing up the findings of the first special audit which have in parts seriously incriminated the management and the supervisory board of Kabel Deutschland," Elliott said in a statement. "The minority shareholders who potentially have been damaged by the boards of Kabel Deutschland and Vodafone have a justified interest in having these allegations examined. We will now pursue this goal by taking legal action."
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 closed flat at 226.40 pence Monday.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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