Windfall for Vodafone shareholders on Verizon deal
€47bn payout would mean €1 per share
Thousands of people with shares in Vodafone are set for a windfall of as much as thousands of euro after the company prepared to sell its stake in a US business.
Vodafone said last night it had agreed to sell its holding in the huge mobile carrier Verizon Wireless to the Verizon Group, in a deal worth around $130bn (€98.5bn).
That will make it the third biggest takeover in history.
Almost half the proceeds of the sale will be distributed to shareholders, with thousands of Irish investors set to benefit.
Industry analysts expected the company to distribute about €47bn directly to investors.
That means shareholders would receive about 83 pence (€0.98) – Vodafone shares are traded in London and priced in sterling – for every Vodafone share they own.
Under those terms, if a person has shares in Vodafone worth €10,000 today, they would be entitled to a one-off payment of about €4,000.
The payout may be a double edged sword for some investors however.
While there will be an initial windfall, the dividend paid by the company every year will be much smaller in the future as Vodafone itself will be a lot smaller.
Justin Cooper of investment firm Capita Registrars warned the deal "may provide short-term gain, but longer-term pain for investors in Vodafone". The initial deal is likely to represent a dividend bonanza, and investors will expect to see a sizeable chunk of the sale proceeds.
"But the situation is more complicated in the longer-term, and investors may face a sting in the tail if the deal affects the company's ability to maintain the current level of payouts," he said.
Vodafone is one of the most widely held shares in the country.
That dates back to Vodafone's purchase of Eircom's mobile phone business Eircell in 2000.
Vodafone paid €4.5bn for Eircell but the company paid for it through new shares in Vodafone.
That meant about 500,000 Eircom shareholders at the time received Vodafone shares as payment for Eircell. While many people have since sold their shares, most are believed to have retained their holding.
Eircom was famously one of the biggest flotations in the history of the state, with about 500,000 "ordinary" people investing in the company.
Vodafone is the biggest mobile phone carrier in Ireland, with about 2.4 million customers in the Republic.
The company also employs more than 1,300 people in the country.
This may not be the last development for Vodafone.
The Verizon deal has sparked renewed speculation that another US telecoms company, AT&T, may try to buy the British firm. That may well lead to another payout for the shareholders.