Vodafone investors due €63bn windfall
Investors in Vodafone will receive a €63.5bn cash and shares windfall after the telecoms giant sold its share in Verizon Wireless for $US 84bn.
The group confirmed one of the biggest corporate deals in history by agreeing to sell its 45% stake in the US operator to its joint venture partner Verizon.
The deal will net investors in Vodafone US $23.9bn in cash (€18bn), plus Verizon shares, a total US $84bn (€63.5bn) payout.
Vodafone announced the long-anticipated US $130bn dollar deal after the London stock market had closed.
The bulk of the proceeds from the deal – 71% – will go to Vodafone shareholders, who could cash in their Verizon shares to take the entire windfall as cash.
But the deal will not involve a tax payment to the UK exchequer, the company revealed, risking further controversy after intense scrutiny of its tax affairs.
Vodafone will pay tax of US $5bn (€3.8bn) in the US, but said the UK is not a “relevant jurisdiction” because its US arm is owned by a Dutch holding company. It added even if the stake was sold from the UK, it would not be taxable under UK law because of an exemption introduced in 2002.
Boss Vittorio Colao said the sale will mean a “very substantial return to shareholders and to the investments relied upon by savers and pensioners”.
The deal has been seen as a major cash injection into the UK economy - effectively another dose of quantitative easing.
Mr Colao said its stake in Verizon Wireless has proved “extremely valuable”, but added the €23bn of cash it retains will go to funding investment in super-fast mobile networks and broadband, as well as paying down debt.
“This transaction has the beauty that it allows both to reward shareholders for their support and strengthen the company for future long-term rewards to shareholders,” he said.
