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Singer’s Elliott Builds Hella Stake in Bet on New Faurecia Offer

Singer’s Elliott Builds Hella Stake in Bet on New Faurecia Offer

Paul Singer’s Elliott Investment Management LP has emerged with a holding of nearly 6.6% of voting shares in Hella GmbH & Co., amid hopes that French rival Faurecia SA will make another offer to remaining shareholders in the German car-parts maker.

Singer holds the voting rights via shares and instruments, according to a filing Monday. The move is a bet the French company will seek a so-called domination agreement with its German target, according to people familiar with the matter. 

Spokespeople for Elliott and Faurecia declined to comment. A spokesperson for Hella wasn’t immediately available for comment.

A domination agreement gives an acquirer wide-ranging control over a target under German law. It requires at least 75% backing from a target’s shareholder base and, if approved, another offer to outstanding shareholders. These new offers typically come at a premium to the initial bid. The move pits the hedge fund against Faurecia’s Chief Executive Officer Patrick Koller, who said his firm doesn’t need a domination agreement to realize synergies and has no issue keeping Hella listed.

Hella rose 3% as of 1:24 p.m. in Frankfurt. Faurecia fell 1.5% in Paris.

Elliott has successfully used this playbook before in Germany. The Florida-based hedge fund was among investors that forced Vodafone Group Plc to sweeten its offer for minority investors in Kabel Deutschland Holding AG in 2020, seven years after it agreed to buy the German telecommunications company. 

And buyout firms Bain Capital and Cinven agreed in 2017 to pay minority shareholders of German drugmaker Stada Arzneimittel AG a higher price for their stock after Elliott pushed for the increase.

Faurecia has secured 73.4% in Hella, it said in a filing last month. The company earlier this year agreed to buy the German peer in a deal valuing Hella at 6.8 billion euros ($7.8 billion).

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