Analysts calculate €5bn worst case cash scenario
Thursday 21 Nov 2019 Author: Steven Frazer

Mobile network Vodafone (VOD) could be left with a €5bn bill if a German court ruling goes against it next week.

On 27 November, a German court will give its verdict on the valuation fairness of Vodafone’s acquisition offer for Kabel Deutschland in 2013. The €87 per share valued the German business at approximately €7.7bn and was part of Vodafone’s bid to expand its range of television and fixed-line services in Germany.

That offer was contested by hedge fund firm Elliott Management, a minority shareholder in Kabel at the time with a 14.4% stake. Elliott subsequently filed a legal suit in 2014 demanding higher compensation for minority shareholders. The legal dispute has been dragging on ever since.

Elliott is believed to have been arguing for a fair value offer nearer €200 per share, and a ‘really adverse ruling’ for Vodafone could create a €5bn liability, according to Jerry Dellis, an analyst at investment bank Jefferies.

A court loss for Vodafone could see it have to find cash to make the payment in the next one to three years.

Vodafone has already made provision on its balance sheet worth €1.88bn, based on the original offer price plus interest.

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