- Vodafone sells 45 per cent Verizon Wireless stake
- Transaction structured in stock, cash and other elements
- Shareholders will receive 71 per cent of net proceeds, mostly in shares
- 2014 dividend to increase by 8 per cent to 11p
- Vodafone to accelerate Vodafone 2015 strategy
Vodafone group has announced that it has reached an agreement to sell its 45 per cent stake in US wireless outfit Verizon Wireless to Verizon Communications in a transaction valued at 130bn dollars (£84bn).
The consideration comprises £38bn in cash and another £38.9bn ($60.2bn) in shares
of Verizon. As of Friday's close Verizon Communication's market capitalisation stood at $135.6bn.
A further £3.2bn will be paid in the form of Verizon loan notes, £2.3bn will be materialised in the form of Verizon's 23% minority interest in Vodafone Italy and £1.6bn will be paid through the assumption by Verizon of Vodafone net liabilities relating to the US Group.
The price paid represents an attractive valuation of 9.4 times' Verizon Wireless's enterprise value/trailing twelve month earnings before interest, taxes, depreciation and amortisation [EV / LTM EBITDA], the company stated in its regulatory news statement.
Shareholders to receive mostly Verizon shares at completion
At completion, Vodafone shareholders are expected to receive all the Verizon shares and $23.9bn (£15.42bn) of cash, equivalent to 112p per share and representing 71% of the net proceeds.
Before the announcement analysts at Jefferies were placing a value of 151p per share on the wireless stake post the capital gains tax.
Following on from the above the Board intends to increase the total 2014 financial year dividend per share by 8% to 11p, and intends to grow it annually thereafter.
And towards where now the strategy?
Lastly, Vodafone will embark on a new organic investment programme, Project Spring, to establish further network and service leadership through additional investments of £6bn over the next three financial years, with a view to accelerating the existing Vodafone 2015 strategy and taking even greater advantage of the growing global demand for ubiquitous high-speed data.
Commenting on the news-flow surrounding Vodafone throughout the day Magister Advisors had this to say; "The biggest question for Vodafone today is "what's next?" Vodafone's DNA, and indeed where it has created most value, has been in its role as a savvy operator across markets.
This creates a risk that Vodafone will become the largest 'digital drug mule' in the world - carrying other vendors' valuable content for a fraction of the upside. Vodafone must evolve - and quickly."
The transaction is expected to close in the first quarter of 2014.
Shares of Vodafone rose by 3.37% on the day to stand at 213.2p by the close.