Vodafone shareholders get details of payout in Verizon deal

British telecoms group also announces stock consolidation which will see shareholders hold six new shares on Monday instead of 11 existing ones

Vodafone has said shareholders will receive 0.026 shares in Verizon Communications plus 36.5 cent for each Vodafone share they own. Photo: Angel Navarrete/Bloomberg

Vodafone has said shareholders will receive 0.026 shares in Verizon Communications plus 36.5 cent for each Vodafone share they own. Photo: Angel Navarrete/Bloomberg

Wed, Feb 19, 2014, 22:56

Ireland’s 383,000 Vodafone shareholders will receive a cash payment of 36.5 cent for each share they hold in the company after the company clarified the precise allocation of cash and shares in its “return of value” to shareholders.

In an announcement this morning it said that shareholders would also receive 0.026 of a share in US telecoms group Verizon as part of the deal. That means shareholders will get one Verizon share for every 39 Vodafone shares they currently hold.

Any fractions of entitlements to shares will be automatically sold. So if you have 350 Vodafone shares, you will receive nine Verizon shares plus about €3.36 on top of your cash payment of €127.75.

Vodafone shareholders also have the option of having Computershare, Vodafone’s share registrar, sell their Verizon shares without any commission cost – as long as they do so before April 4th.

The British telecoms group also announced yesterday the details of a share consolidation plan. It means that shareholders will from Monday next own six Vodafone shares for every 11 shares they now own. If a shareholder had 350 shares in the company up to now, they will own 190 shares from next week.

Again, any fractions of shares will be sold, with shareholders receiving an additional cash payment.

While Vodafone indicated last December what shareholders were likely to receive from the payout, the precise split between cash and shares was only announced yesterday based on the trading price of Verizon shares over a 20-day period to February 18th.

The full value of the payment, including the shares, is £1.02, which translated yesterday to a fraction under €1.24 per share held. The actual final value of the cash received will depend on foreign exchange rates next week, the company said.

Shareholders who originally received their Vodafone shares through their ownership of stock in telecom Éireann and who opted to receive the “windfall” as a capital payment, will have no tax bill as Revenue has determined the US business being sold by Vodafone to fund the payback accounted for more than €1.24 of the original purchase price of the Vodafone shares.

However, other shareholders will face a bill for between 31 and 55 per cent of the payout in income tax, universal social charge and PRSI.

Irish shareholders account for just over 1 per cent of the group.

The new consolidated Vodafone shares will start trading on the market next Monday, assuming the entire arrangement secures UK court approval as expected on Friday.

Vodafone’s sale of its 45 per cent stake in the largest US wireless group by market share for $130 billion will allow Verizon to gain full control of the mobile operator.

Verizon had been trying to buy Vodafone out of the joint venture – first formed in 2000 – since at least 2007 when the UK mobile group’s then chief executive, Arun Sarin, rejected a $35 billion offer from the US group.

The sale will enable Verizon to retain 100 per cent of the profits that the US wireless business generates and give it full management control, removing the need for it to consult Vodafone on key strategic moves.

Additional reporting Reuters