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Vodafone Faces Lawsuit Over Kabel Deutschland Bid

BERLIN (The Deal) -- A Munich court Thursday confirmed a civil lawsuit had been filed against Vodafone Group (VOD) related to its 7.7 billion euro acquisition ($10.4 billion) of German cable company Kabel Deutschland Holding but said it couldn't disclose the plaintiff, which is believed to be New York hedge fund Elliott Management.

The Munich regional court said Vodafone has until October to respond before a hearing date, which is likely to be next year, can be set.

The confirmation comes amid media reports that Elliott is hoping to squeeze more cash out of Vodafone after the hedge fund, led by Paul Singer, gathered a 13.5% Kabel Deutschland stake during Vodafone's offer.

Elliott openly criticized the 84.53 euro per-share price and now has a valuation from German M&A consultancy Rodl & Partner that claims shareholders should receive between 225 euros and 275 euros per share, Manager Magazin reported.

The New York investor is becoming a regular on Germany's dealmaking scene. The hedge fund last year prohibited San Francisco healthcare giant McKesson Corp. from buying and delisting German drug distributor Celesio AG. McKesson this year was able to buy a majority of Celesio but only after reaching an agreement with Elliott, which remains invested.

The fund is apparently banking on German securities regulations that allow holdout shareholders to demand a fresh valuation on the target before they are forced out. The valuations have often led to surprising bonuses for patient shareholders.

Singer is also reportedly part of a similar lawsuit surrounding Terex Corp.'s 936 million euro acquisition of control of Germany's Demag Cranes AG. That suit mimics the suit filed against Vodafone.

Elliott is getting some backing from the German securities market: Kabel Deutschland shares are currently trading at 108.10 euros, though the buyers are likely to be other investors making the same bet as Elliott.

Rodl refused to comment and Elliott didn't respond to a request for comment.

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