Seeking Alpha

Verizon/Vodafone deal closes. Vodafone to return $85B to shareholders.

  • Verizon (VZ -0.3%) has officially completed its $130B purchase of Vodafone's (VOD +0.5%) 45% stake in Verizon Wireless. As previously announced, Verizon is issuing 1.27B shares to Vodafone (current value of $61B), and paying for the rest of the deal in cash.
  • Vodafone says it will return $23.9B of the cash to shareholders in addition to distributing the Verizon shares (previous), leading to a total return of $85B. All signs suggest the carrier will use a chunk of the remaining post-tax windfall to go acquisition-hunting.
  • Verizon reiterates the deal will immediately be accretive to EPS by 10%. Over the long haul, it's expected to give Verizon more flexibility to integrate its wireline and mobile services, and to cut overhead by combining redundant divisions.
Comments (20)
  • Welt
    , contributor
    Comments (150) | Send Message
     
    Great step for VZ shareholders.
    21 Feb, 01:49 PM Reply Like
  • Landsharks6
    , contributor
    Comments (105) | Send Message
     
    Appears it may be a good step for both VZ & VOD, any thoughts?
    21 Feb, 01:55 PM Reply Like
  • Welt
    , contributor
    Comments (150) | Send Message
     
    Agree to being a positive for both. However, I think it is more short term positive for VOD and long term positive for VZ. I am a VZ holder myself and really like the fact that they are claiming this deal is accretive to earnings and will help them cut unnecessary redundant costs.
    21 Feb, 02:09 PM Reply Like
  • jimsod
    , contributor
    Comments (8) | Send Message
     
    If one owns 1,000 shares of both VZ and VOD, how does he fare in this deal?
    21 Feb, 03:03 PM Reply Like
  • sdev62
    , contributor
    Comments (2) | Send Message
     
    Thanks for your service....I have the same question, I own 1K of both.
    21 Feb, 04:10 PM Reply Like
  • philipmax
    , contributor
    Comments (258) | Send Message
     
    I'll give it a shot.

     

    From VZ's end, you will have the same amount of VZ shares (1000). The price is expected to remain in the same range for a while, as integration costs will take some of the fluff out of the entity. Long range, VZ will definitely benefit greatly.

     

    VOD will give you an additional .26 share of VZ for each share of VOD that you own. You will therefor get 260 shares of VZ as a dividend.

     

    Now you'll own 1260 shares of VZ.

     

    VOD will also give you approximately, $7.57 (not completely sure) of cash for each share of VOD $7,570.00.

     

    Immediately after the payout, VOD reverse splits it stock. You will get 5/11 of your VOD shares in exchange for your old VOD, or 545 shares in the recapitalized VOD. The price of the new shares is expected to be about the same as its present range (33-38).

     

    Now. You have 1260VZ X$48= $60,480.00
    You keep the dividend of $ 7,570.00
    and
    You have 545 VOD X 38= $20,710.00
    ___________
    $88,760.00

     

    on 2/20/14 you owned

     

    1000 VZ @48 = $48,000.00
    1000 VOD @38 = $38,000.00
    __________
    $86,000.00

     

    That's the best I can come up with.
    21 Feb, 05:01 PM Reply Like
  • Landsharks6
    , contributor
    Comments (105) | Send Message
     
    Are you sure its 7.57 per share of VOD my understanding was 4.85 per share .Also my statement already reflects the reverse split I had 429 shares now have 233.51 and it doesn't show any VZ shares or cash yet, oh and a O balance for the 233.51 shares.Now I will be wondering what the heck is going on until Monday. Anyone know whats up with that?
    22 Feb, 12:21 AM Reply Like
  • philipmax
    , contributor
    Comments (258) | Send Message
     
    1st correction:
    VOD reverse is 6/11 not 5/11. the math is correct 545 new VOD for old shares.
    23 Feb, 03:55 AM Reply Like
  • lensenkomedia
    , contributor
    Comments (5) | Send Message
     
    Well if you compare it to whatsapp sale .....I would say Verizon got a pretty good a deal paying 5x more and owning the other half of the largest carrier in the the lagest market in wireless in the world.yea i would say it was ok
    21 Feb, 04:10 PM Reply Like
  • Connermalrose
    , contributor
    Comments (118) | Send Message
     
    This should be good for cost cutting and also should save vz the 4.5 billion in dividends it was paying vod. Vz says this will contribute to there earning by 10% so i only hope with all the debt they have put on that they use these saving and increased earning to pay off the debt from this deal ASAP
    22 Feb, 08:03 PM Reply Like
  • Tim Wright
    , contributor
    Comments (18) | Send Message
     
    When will the new shares and distributions take place?
    23 Feb, 05:48 AM Reply Like
  • G.E.P
    , contributor
    Comments (6) | Send Message
     
    Is it .026 or .26 not the same
    23 Feb, 09:34 AM Reply Like
  • Landsharks6
    , contributor
    Comments (105) | Send Message
     
    its .26 or 26 shares of VZ per 100 of Vod. That I know for a fact. <y statement already shows my revrse split on my Vod shares it went from 429 VOD to 233.51 VOD, the rest hasn't shown up yet, I was told it will be in account before open on Monday 2/24/14. The cash amount I am now perplexed on. I believe that happens on 3/4/14. which upsets me big time because a lot can happen in a week.
    23 Feb, 04:08 PM Reply Like
  • G.E.P
    , contributor
    Comments (6) | Send Message
     
    Know how many times you say it it still not .26 shares it's .026 shares big differnce
    23 Feb, 09:35 AM Reply Like
  • Grumpy!
    , contributor
    Comment (1) | Send Message
     
    If you own ADR deposit shares, 1 ADR share = 10 Vodaphone shares.
    So - for U S investors, you will get .26 share of Verizon Communications for each ADR share you own.
    12 Mar, 11:26 PM Reply Like
  • McMillan
    , contributor
    Comment (1) | Send Message
     
    As a holder of Vodafone shares, come the 24th Feb 2014, I don't see where
    I reap the HUGE financial benefits previously forecast once the consolidation
    is applied. Seems to me it is a case of giving with one hand and taking most
    of it back with the other……..
    JoeMac
    23 Feb, 01:47 PM Reply Like
  • Landsharks6
    , contributor
    Comments (105) | Send Message
     
    I agree McMillan, this deal didn't happen just the way I thought it was . I feel like us shareholders have been mislead or we missed the very fine small print.
    23 Feb, 04:11 PM Reply Like
  • Landsharks6
    , contributor
    Comments (105) | Send Message
     
    All we gained was an 8% increase in VOD dividends & share price escalated about 25% after deal was announced on less shares also the diversification into VZ which if I wanted that I would have sold & bought something else. In addition to that the huge amount of cash VOD gets should keep dividend safe & growing for years to come, However I feel like you McMillan, we should have gotten a lot more for the hassle I am disgusted right now because all my account shows is less shares of VOD with a 0 balance on them. I haven't really got a straight answer on this deal since it was announced.
    23 Feb, 07:59 PM Reply Like
  • a5fung
    , contributor
    Comments (11) | Send Message
     
    How are the cost basis of distributed VZ and post-reverse-split calculated? I bought VOD around 20-25, based on what I see in my account, VOD cost basis is just adjusted according to the 6/11 reverse split, and VZ cost basis is just the market price at distribution. Is that correct? Does that mean the paper gain I was sitting on is wiped? I can sell both today with very modest gains/losses, <1%.
    25 Feb, 01:24 PM Reply Like
  • 123JD
    , contributor
    Comment (1) | Send Message
     
    I hear you on this. In theory, I should be up on VOD $5/share, yet after reverse split, div, and given the VZ shares, I'm still down. I thought this was supposed to be a good thing for shareholders. My chart (TD Ameritrade) shows a reset to 72 then the big drop down to 41 yesterday.
    We'll see what happens in the 3/4 distribution.
    25 Feb, 01:25 PM Reply Like
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