|[September 02, 2013]
VODAFONE TO REALISE US$130 BILLION FOR ITS 45% INTEREST IN VERIZON WIRELESS
LONDON --(Business Wire)--
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART)
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
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Vodafone announces that it has reached agreement to dispose of its US
group whose principal asset is its 45% interest in Verizon Wireless
("VZW") to Verizon Communications Inc. ("Verizon" - NYSE: VZ),
Vodafone's joint venture partner, for a total consideration of US$130
billion (£84 billion).
The consideration1 comprises:
US$58.9 billion (£38.0 billion) in cash;
US$60.2 billion (£38.9 billion) in Verizon shares2;
US$5.0 billion (£3.2 billion) in the form of Verizon loan notes;
US$3.5 billion (£2.3 billion) in the form of Verizon's 23% minority
interest in Vodafone Italy; and
US$2.5 billion (£1.6 billion) through the assumption by Verizon of
Vodafone net liabilities relating to the US Group.
The VZW Transaction represents an attractive valuation of 9.4x EV /
LTM EBITDA and 13.2x EV / LTM OpFCF.
Vodafone intends to implement a new organic investment programme,
Project Spring, to establish further network and service leadership
through additional investments of £6 billion over the next three
At completion, Vodafone shareholders are expected to receive all the
Verizon shares and US$23.9 billion of cash (the "Return of Value")
totalling US$84.0 billion (£54.3 billion), equivalent to 112p per
share and representing 71% of the Net Proceeds.
Vodafone expects that strong free cash flow generation will continue
to underpin shareholder returns. The Board, therefore, intends to
increase the total 2014 financial year dividend per share by 8% to
11p, and intends to grow it annually thereafter.
Subject to the satisfaction of certain conditions precedent, the
Transactions are expected to complete in Q1 2014.
Vodafone Group Chairman Gerard Kleisterlee said:
"Our sustained investment in Verizon Wireless has created a great
deal of value for shareholders from a market leader with great momentum.
Verizon's offer now provides us with an opportunity to realise this
value at an attractive price. The transaction will position Vodafone
strongly to pursue our leadership strategy in mobile and unified
communication services for consumers and enterprises both in our
developed markets and across our emerging markets businesses. It will
also enable us to provide substantial returns to individual shareholders
and to the investment funds relied upon by savers and pensioners."
Vodafone Group Chief Executive Vittorio Colao said:
"We are pleased that our long and successful partnership with Verizon
will yield a significant return of value to our shareholders, rewarding
them for their continuing support of Vodafone's investment strategy, and
we wish Lowell and the Verizon team continuing success over the years
ahead. As a result of the transactions, we will also greatly enhance
Vodafone's long-term prospects through Project Spring, our new programme
of additional organic investments in 4G, 3G, fibre and broadband,
enterprise services and improved customer experience across all of our
markets. Project Spring will strengthen and accelerate our existing
Vodafone 2015 strategy, enabling us to take even greater advantage of
the growing global demand for ubiquitous high-speed data. This will in
turn underpin our intention to grow the dividend per share annually, in
line with our track record of providing shareholders with sustainable
and high quality returns."
Verizon Communications Inc. Chairman and Chief Executive Lowell
"These transactions mark the culmination of a sustained and highly
productive relationship between Verizon and Vodafone, and provides a
very strong foundation for both companies to achieve their respective
long-term strategic goals. I wish Gerard, Vittorio and the Vodafone team
all the best for the future."
Overview of the Transactions
Description of the consideration
Vodafone has agreed to dispose of its US group whose principal asset is
its 45% interest in VZW to Verizon for a total consideration of US$130
billion. The consideration, subject to the adjustments as described
below, comprises US$58.9 billion in cash, US$60.2 billion in Verizon
shares, US$5.0 billion in the form of Verizon loan notes, US$3.5 billion
in the form of Verizon's 23% minority interest in Vodafone Italy and
US$2.5 billion through the assumption by Verizon of Vodafone net
liabilities relating to the US Group.
Verizon has the right to increase the cash portion of the total
consideration by up to US$15 billion, and to decrease the number of
Verizon shares to be issued accordingly. If Verizon exercises this
right, the intended distribution to Vodafone shareholders will include
this additional cash in lieu of the relevant number of Verizon shares.
The circumstances in which Verizon may exercise this right are explained
in more detail in Appendix I.
A fixed value collar has been agreed between Vodafone and Verizon. If
the volume weighted average Verizon share price on the NYSE during the
20 business days ending three days prior to the completion of the VZW
Transaction is between US$47.00 and US$51.00 the number of shares to be
issued by Verizon will be adjusted such that the aggregate value of the
share consideration will remain US$60.2 billion, unless reduced by the
cash election. On this basis, a maximum of 1,280 million Verizon shares
and a minimum of 1,179 million Verizon shares will be issued to Vodafone
shareholders. If the volume weighted average Verizon share price during
that period is above the range then the minimum of 1,179 million shares
will be issued; and if it is below the range then the maximum of 1,280
million shares will be issued.
Verizon loan notes
The US$5.0 billion Verizon senior unsecured floating rate loan notes are
in two equal tranches with maturities of 8 and 11 years. These loan
notes are ranked pari passu with Verizon's existing senior debt and will
be priced in line with the trading levels of similar Verizon senior debt
prior to completion. Vodafone has staged sale rights from 2017.
Acquisition of Verizon's 23% minority interest in Vodafone Italy
Vodafone and Verizon have also agreed that Vodafone will acquire
Verizon's 23% minority interest in Vodafone Italy for US$3.5 billion
(£2.3 billion), thereby securing full ownership of Vodafone Italy.
Project Spring organic investment programme
Demand from individuals and businesses for ubiquitous high speed data is
growing rapidly, creating attractive growth opportunities for Vodafone
in mobile and unified communications services. The transition to 4G and
unified communications makes this the right time in the evolution of the
sector for Vodafone to pursue further development and differentiation.
Vodafone is executing its Vodafone 2015 strategy to address these
opportunities, and now plans to make significant additional organic
investments to enhance further its competitive positioning, leading data
networks and compelling branded customer experience over the next few
As a result, Vodafone will implement a programme of additional organic
investment, named Project Spring, amounting to a total operating free
cash flow investment of £6 billion over the next three financial years.
Key areas for investment include:
accelerated 4G network build, covering 90% of our five main European
markets by 2017, supported by single RAN and high capacity backhaul;
deeper 3G coverage and capacity in mature markets;
unified communications: extended fibre roll-out, as well as widened
NGN and VDSL resale reach;
upgraded distribution presence, both online and retail;
additional 3G voice and data coverage in emerging markets;
enhanced Enterprise service portfolio, including IP-VPN, Cloud,
Hosting and M2M;
faster deployment of mobile payment services; and
development of new and standardised systems to improve customer
experience and simplify Vodafone's operations.
Vodafone will provide more detail on Project Spring in its interim
results presentation in November 2013.
Return of Value and share consolidation
It is intended that the Return of Value will be implemented at
completion of the VZW Transaction by way of a B share cancellation
scheme to be effected by way of a Court-approved scheme of arrangement
and associated reduction of capital (the "Scheme"). Under the Scheme,
all Vodafone shareholders will be issued unlisted, non-voting bonus
shares, which will shortly thereafter either be cancelled in
consideration of the relevant amount of Verizon shares and cash (in US
dollars), or the holders will receive the relevant amount of Verizon
shares and cash (in US dollars) in satisfaction of a special
distribution on the bonus shares (which will thereafter be either
cancelled or repurchased), depending on shareholder elections and
subject to applicable securities laws. There will be no difference in
the amount of Verizon shares and cash (in US dollars) received by
Vodafone shareholders as a result of their election.
Holders of Vodafone ADRs will also be entitled to participate in the
Return of Value and to vote at the Court Meeting and General Meeting,
and the Verizon shares and cash (in US dollars) to which they are
entitled will be distributed to them in accordance with the terms of the
depositary agreement with Bank of New York Mellon.
Given the scale of the Transactions and the intended Return of Value,
Vodafone also intends to effect a consolidation of its ordinary share
capital to seek to maintain broad comparability of its share price
before and after the Return of Value.
Further information on the Scheme and Return of Value will be included
in the circular to be dispatched to Vodafone shareholders in due course.
Further information can also be found online at www.vodafone.com/investor
Pro forma guidance and new dividend policy
The Group's financial results for the 2014 financial year will include
the contribution of VZW up to the date of this announcement, but will
include the additional 23% of Vodafone Italy only from the date of
completion of that transaction, and consequently will not be
representative of performance.
The Group is, therefore, providing revised pro forma guidance3
for the 2014 financial year, which excludes VZW and includes 100% of
Vodafone Italy for the whole year. In addition, this revised pro forma
guidance reflects equity accounting for its remaining joint ventures
(principally Australia and Indus Towers) consistent with IFRS
On this revised pro forma basis, the Group expects to deliver adjusted
operating profit of around £5 billion and free cash flow of £4.5-5.0
billion for the 2014 financial year. The underlying performance
assumptions of the business used when setting guidance in May 2013
Vodafone will retain a strong balance sheet and expects to maintain a
low single A credit rating. Immediately following completion of the
Transactions, the Return of Value and the Kabel Deutschland acquisition,
Vodafone will have pro forma net debt / EBITDA of approximately 1.0x.
The Board will continue to review the Group's capital structure and
potential for further shareholder returns over the medium term,
depending on operating performance and the availability of value
creating investment opportunities.
The Board expects that strong free cash flow generation will continue to
underpin shareholder returns, and so intends to increase the interim
dividend per share (pre-consolidation) by 8% to 3.53p. Assuming
completion of the Transactions, the Board also intends to increase the
final dividend per share (post-consolidation) by 8% resulting in a
proposed total dividend per share of 11p for the 2014 financial year,
and to grow it annually thereafter.
Transaction structure and tax impact on Vodafone
Vodafone owns the interest in VZW through a US group which also owns
non-US interests acquired in the merger with AirTouch Communications
Inc. in 1999 together with other non-US interests acquired over time
(together, the "RoW Interests"). Vodafone will be exiting its principal
US business as a result of the VZW Transaction and will, therefore,
undertake a rationalisation and reorganisation prior to completion of
that transaction so that those RoW Interests will be held by Vodafone
outside the US in the future. The reorganisation will give rise to a US
tax liability estimated at approximately US$5 billion under standard US
tax rules and based on the current valuation of those RoW Interests.
The US Group is owned by a Vodafone European holding company, based in
the Netherlands, and will be sold to Verizon as part of the VZW
Transaction in its entirety once the rationalisation and reorganisation
is complete. The sale of the US Group is not taxable under standard US
and Dutch tax rules. Under the US tax code, US tax is not imposed on
these types of sales of shares by non-US residents. Such treatment is
also consistent with US tax treaties. Dutch tax law provides a
participation exemption on capital gains arising from the sale of
shares. Whilst the UK is not a relevant jurisdiction for tax purposes
given the locations of the buyer and the seller, under rules established
in 2002, the UK has similar shareholding disposal exemptions to those of
the Netherlands and the VZW Transaction would, therefore, not be taxable
under standard UK tax rules were the US Group to be sold from the UK.
Completion of the VZW Transaction is subject to the satisfaction of
certain conditions precedent, including the approval of Vodafone's and
Verizon's shareholders and certain regulatory clearances, including from
Completion of the Vodafone Italy Transaction is subject to completion of
the VZW Transaction and to additional regulatory clearances, including
EU merger clearance. Accordingly, if the conditions to the VZW
Transaction were to be satisfied at a time when one or more of the
conditions to the Vodafone Italy Transaction remained outstanding, the
VZW Transaction would complete but the Vodafone Italy Transaction would
complete only when the final condition to the Vodafone Italy Transaction
was satisfied or, if applicable, waived.
A summary of the conditions to which the Transactions are subject is set
out in Appendix I.
The Scheme is subject to the approval of the requisite majority of
Vodafone shareholders and, if approved, to the sanction of the Court and
the confirmation by the Court of the reductions of capital forming part
of the Scheme.
If the conditions to the VZW Transaction were to be satisfied in
circumstances where the Scheme could not be implemented in full, the VZW
Transaction (and, if the conditions to the Vodafone Italy Transaction
were to be satisfied, also the Vodafone Italy Transaction) would still
be completed and the Return of Value would be effected following
completion of the VZW Transaction, to the extent possible and
appropriate taking into account, among other things, the distributable
reserves position of Vodafone and the need to be able to pay regular
dividends. Under those circumstances, Vodafone shareholders would
receive all of the Verizon shares and as much cash as practicable, and
Vodafone would thereafter seek to distribute the remainder of the Return
of Value as soon as reasonably practicable.
Court Meeting, General Meeting, Circular and recommendation
Due to its size, the VZW Transaction will be a Class 1 transaction under
UK Listing Rules. In addition, as Verizon is a related party in relation
to Vodafone, both the VZW Transaction and the Vodafone Italy Transaction
will be related party transactions under the UK Listing Rules. For these
reasons, the Transactions require the approval of Vodafone shareholders,
which will be sought at a Vodafone general meeting to be convened in due
course (the "General Meeting"). Vodafone and Verizon have agreed that
the Transactions will be put to Vodafone shareholders for approval
together and not separately.
The Scheme and certain related matters (such as the consolidation of
Vodafone's ordinary share capital and consequential amendments to
Vodafone's articles of association) will also require the approval of
Vodafone shareholders. Under the Companies Act 2006, the Scheme is also
required to be approved at a separate meeting of shareholders convened
for that purpose under the direction of the Court (the "Court Meeting"),
to be held on the same day immediately before the General Meeting.
The circular to be dispatched to Vodafone shareholders in due course
will contain a notice convening, and setting out the resolutions to be
proposed at, the Court Meeting and General Meeting. It is currently
expected that the Court Meeting and General Meeting will be held in
January 2014. An indicative timetable of expected principal events is
set out below.
The Board considers that the Transactions and the Return of Value are in
the best interests of Vodafone and its shareholders and intends to
recommend that shareholders vote in favour of the resolutions to be
proposed at the Court Meeting and General Meeting.
The Board, which has been so advised by Goldman Sachs and UBS, considers
the terms of the Transactions to be fair and reasonable so far as
Vodafone shareholders are concerned. In providing financial advice to
the Board, Goldman Sachs and UBS have each taken into account the
commercial assessments of the Directors.
Expected timetable of principal events
Vodafone shareholder circular dispatched
Verizon's US proxy statement, US registration statement and UK
Vodafone Court meeting and General Meeting
Verizon stockholders' meeting
Regulatory approvals received
Return of value implemented
Additional shareholder facilities
At Vodafone's request, Verizon has agreed to provide Vodafone
shareholders holding fewer than 50,000 Vodafone shares with the means of
realising the value of their Verizon shares at completion in a
straightforward and cost-effective manner through a dealing facility.
The availability of such facility will be subject to regulatory
considerations, the requirements of the Listing Rules and other
practicalities. In addition and subject to applicable securities laws,
Verizon will make arrangements to provide shareholders with CREST
Depositary Interests ("CDIs") and related facilities to allow settlement
of trading in Verizon shares through CREST.
Details of such facilities will be included in the Circular, and a list
of common questions and answers can be found online at www.vodafone.com/investor
Investor and analyst call
Vodafone is hosting a conference call for analysts and investors which
will start promptly at 9.00 a.m. (London time) on Tuesday, 3 September
2013. Please dial into this conference call using the following dial-in
Tel: +44 (0) 20 3426 2845
UK toll free: 0808 237 0033
US toll: +1 347 329 1282
US toll free: +1 866 928 6048
The conference call will also be webcast live from www.vodafone.com/investor
There will be a replay facility available for seven days:
Tel: +44 (0) 20 3426 2807
UK toll free: 0808 237 0026
US toll free: +1 866 535 8030
There will also be a second conference call at 2.30 p.m. (London time) /
9.30 a.m. (New York time) on Tuesday, 3 September 2013 for US based
analysts and investors.
Tel: +44 (0) 20 3426 2845
UK toll free: 0808 237 0033
US toll: +1 347 329 1282
US toll free: +1 866 928 6048
The associated presentation will also be available for download at 8.30
a.m. (London time) on Tuesday, 3 September 2013 via the following link: www.vodafone.com/investor
There will be a replay facility available for seven days:
Tel: +44 (0) 20 3426 2807
UK toll free: 0808 237 0026
US toll free: +1 866 535 8030
Goldman Sachs and UBS are acting as joint financial advisers and joint
sponsors to Vodafone on the Transactions. Citigroup is acting as
Corporate Broker to Vodafone on the Transactions.
Appendix II to this announcement contains further details of the sources
of information and bases of calculations set out in this announcement.
Appendix III contains definitions of certain expressions used in this
1 The consideration is payable in US dollars and, as such,
the sterling equivalent will be subject to movements in the US dollar /
sterling foreign exchange rate. On 30 August 2013, being the last
practicable date before this announcement, the exchange rate was £1=
US$1.5482 and the conversion to sterling is set out for convenience.
2 Assuming the Verizon share price is within the range of
US$47-51 per share. As at 30 August 2013, the Verizon closing share
price was US$47.38.
3 See Appendix II for the key assumptions.
4 The expected timing set out in this table is indicative
only and subject to change based on a number of factors, some of which
are outside Vodafone's control, including Verizon's ability to prepare
and receive approval to issue relevant public documents and the dates on
which the relevant regulatory and other conditions are fulfilled.
Additional information on Verizon
Further information on Verizon can be obtained from www.verizon.com/investor
Additional information on VZW
VZW is a partnership between Verizon (55%) and Vodafone (45%). Verizon
is the United States' largest wireless company, and serves 100.1 million
retail connections and operates more than 1,900 retail locations
As at 31 March 2013, VZW accounted for £38.4 billion of Vodafone's gross
assets of £142.7 billion and contributed £6.4 billion to Vodafone's
consolidated profit before tax of £3.3 billion for the financial year
ended 31 March 2013.
Additional information on Vodafone Italy
Vodafone Italy is a mobile and fixed telecommunications business, which
is a joint venture between Vodafone (77%) and Verizon (23%). Vodafone
Italy has 29.1 million mobile customers and 1.7 million fixed broadband
users. The company has a leading position in the mobile market with a
35% service revenue market share.
As at 31 March 2013, Vodafone Italy accounted for £10.3 billion of
Vodafone's gross assets of £142.7 billion and contributed a loss of £3.4
billion (after goodwill impairment charges of £4.5 billion) to
Vodafone's consolidated profit before tax of £3.3 billion for the
financial year ended 31 March 2013.
This announcement has been prepared by Vodafone. It has been provided
for information purposes only. By viewing this document, you agree to
and acknowledge the terms set out herein.
This document does not constitute, or form part, of any offer or
invitation to sell, allot or issue or any solicitation of any offer to
purchase or subscribe for any securities, nor shall it (or any part of
it) form the basis of, or be relied on in connection with, or act as any
inducement to enter into, any contract or commitment for securities. No
investment decision should be taken in relation to any matter discussed
herein except in reliance upon the formal documentation relating to this
The information in this announcement has been compiled by Vodafone and
has not been independently verified. Except as required by law or
regulation, no person has undertaken any obligation to update this
document or to provide any additional information to any recipient or to
correct any inaccuracies which may become apparent. No undertaking,
representation, warranty or other assurance, express or implied, is made
or given by or on behalf of the Company or any of its directors,
officers, partners, employees, agents or advisers or any other person as
to the accuracy, completeness or fairness of the information contained
in this announcement and no responsibility or liability whatsoever for
loss, however arising, directly or indirectly, is accepted by any of
them for any such information. In particular, but without limitation, no
representation or warranty is given as to the achievement or
reasonableness of, and no reliance should be placed on, any projections,
targets, estimates or forecasts contained in this announcement. This
announcement has been prepared without reference to your particular
investment objectives, financial situation, taxation position and
The distribution of this document in certain jurisdictions may be
restricted and accordingly it is the responsibility of any person into
whose possession the document comes to inform themselves about and
observe such restrictions.
Forward Looking Statements
Certain information contained in this document constitutes
"forward-looking statements," which can be identified by the use of
terms such as "may", "will", "should", "expect", "anticipate",
"project", "estimate", "intend", "continue," "target" or "believe" (or
the negatives thereof) or other variations thereon or comparable
terminology. Such statements express the intentions, opinions, or
current expectations of Vodafone with respect to possible future events
and are based on current plans, estimates and forecasts which Vodafone
has made to the best of its knowledge but which do not claim to be
correct in the future. Due to various risks and uncertainties, actual
events or results or actual performance of the Company may differ
materially from those reflected or contemplated in such forward-looking
statements. No assurances can be given that the forward-looking
statements in this announcement will be realised. As a result,
recipients should not rely on such forward-looking statements. Subject
to compliance with applicable law and regulations, Vodafone undertakes
no obligation to update these forward-looking statements. No
representation or warranty is made as to the achievement or
reasonableness of such forward-looking statements. No statement in this
document is intended to be nor may be construed as a profit forecast.
Goldman Sachs / UBS
Goldman Sachs, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting for
Vodafone and no one else in connection with the Transactions and will
not be responsible to anyone other than Vodafone for providing the
protections afforded to clients of Goldman Sachs, or for giving advice
in connection with the Transactions or any matter referred to herein.
UBS, which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting for Vodafone and
no one else in connection with the Transactions and will not be
responsible to anyone other than Vodafone for providing the protections
afforded to clients of UBS, or for giving advice in connection with the
Transactions or any matter referred to herein.
FURTHER INFORMATION ABOUT THE TERMS AND CONDITIONS OF THE VZW
TRANSACTION AND THE VODAFONE ITALY TRANSACTION
This appendix provides further information about the material terms and
conditions of the VZW Transaction and the Vodafone Italy Transaction.
Capitalised terms used below and not defined in this Appendix are
defined in Appendix III.
Vodafone, V4L and Verizon have entered into an agreement (the "VZW SPA")
for Verizon to acquire all of the outstanding stock in VAF1, the holding
company of Vodafone's US group which holds the 45% interest in Verizon
In addition, Vodafone's subsidiary, VEBV, the current holder of 77% of
the shares in Vodafone Italy, and Verizon's subsidiary VBIHBV, the
current holder of 23% in Vodafone Italy, have entered into a share
purchase agreement (the "Vodafone Italy SPA") pursuant to which VBIHBV
will sell its 23% stake in Vodafone Italy to VEBV.
Subject to approval by Vodafone shareholders and the Court, the VZW
Transaction will be implemented by way of the Scheme, but if the Scheme
is not approved by the Court within a specified period but the other
conditions to completion of the VZW Transaction are satisfied, the VZW
Transaction will still complete through a share purchase transaction. At
completion, V4L will transfer its shares in VAF1 to Verizon and Verizon
will issue the Verizon shares to Vodafone shareholders and pay the cash
consideration and issue the Verizon loan notes to V4L.
Subject to the conditions to the Vodafone Italy Transaction being
satisfied at such time, the Vodafone Italy Transaction will be completed
at the same time as the VZW Transaction. If not, the Vodafone Italy
Transaction will be completed when its conditions are satisfied.
Further information about the consideration for the VZW Transaction
Prior to the date on which the Circular is dispatched, Verizon has the
right to increase the cash portion of the total consideration by up to
US$15 billion, and accordingly to decrease the number of Verizon shares
to be issued by the proportion that the cash election represents of
US$60.2 billion. After the Circular is dispatched, Verizon may exercise
this right again, on a single occasion, up to 10 business days prior to
the anticipated date of completion, and only if Verizon fails to obtain
the requisite approval of its stockholders to increase the number of
shares of Verizon common stock authorised by its certificate of
incorporation, and then only in an amount of up to US$5 billion or the
unutilised balance of the US$15 billion aggregate limit, whichever is
less. If Verizon exercises this right, the intended distribution to
shareholders will include this additional cash in lieu of Verizon shares.
The material conditions to completion of the VZW Transaction are:
i. the passing of the requisite resolutions by Vodafone shareholders at
the General Meeting;
ii. the approval of the Scheme by Vodafone shareholders at the Court
iii. the passing of the requisite resolutions by Verizon stockholders at
the Verizon stockholders' meeting;
iv. obtaining FCC approval;
v. the completion by Vodafone of the Reorganisation;
admission of the Verizon shares to the NYSE and NASDAQ, and of the
Verizon shares to the Official List of the UKLA and to trading on the
admission of the new Vodafone shares (arising as a result of the share
consolidation) to the Official List of the UKLA and to trading on the
the Scheme being sanctioned by the Court and the reductions of capital
forming part of the Scheme being confirmed by the Court and becoming
provided, that if the conditions set out in (ii), (vii) and (viii) have
not been satisfied within 20 business days after the first hearing of
the Court to sanction the Scheme, then the VZW Transaction shall be
completed pursuant to a share purchase rather than the Scheme.
The material further conditions to completion of the Vodafone Italy SPA
are obtaining the requisite regulatory approvals, including clearance
from the EU Commission and, where applicable, the Italian Communication
The VZW Transaction can also be terminated in certain circumstances,
i. if it does not complete within 12 months of being signed;
ii. by either Vodafone or Verizon, within 30 days after the other's
board of directors changes its recommendation to its shareholders or
stockholders, as applicable, to vote in favour of the VZW Transaction;
iii. by either Vodafone or Verizon, if the requisite resolutions of
Vodafone shareholders or Verizon's stockholders are not obtained;
iv. by Vodafone, if there has been a material and unremedied violation
or breach by Verizon of an undertaking, representation or warranty which
causes or is reasonably likely to cause any of the conditions to
completion of the VZW Transaction not to be satisfied;
v. by Verizon, if there has been a material and unremedied violation or
breach by Vodafone of an undertaking, representation or warranty which
causes or is reasonably likely to cause any of the conditions to
completion of the VZW Transaction not to be satisfied;
by Vodafone, if following signing there is a change in law (or, in
certain circumstances, a proposed change in law) or an adverse ruling
or statement from certain tax authorities, which would impose a
material incremental tax cost to Vodafone's group in respect of the
VZW Transaction or the Reorganisation; and
by Vodafone, if Vodafone is ready, willing and able to complete the
VZW Transaction but Verizon is unable to complete by reason that the
full proceeds of its financing are not available to Verizon at
Vodafone has also agreed that its board will recommend that shareholders
vote in favour of the requisite resolutions at the General Meeting and
Court Meeting, subject to the Directors' right to change such
recommendation in accordance with their fiduciary duties (the "Vodafone
Recommendation"). Verizon has agreed that its board will recommend that
Verizon stockholders vote in favour of the requisite resolutions at a
meeting of Verizon stockholders, but Verizon's board of directors may
change its recommendation in response to certain intervening events if
it considers a change in recommendation is required by its fiduciary
duties, and after prior consultation with Vodafone (the "Verizon
Vodafone has agreed to pay Verizon a termination fee of US$1.55 billion
if the VZW SPA is terminated by Verizon in the circumstances described
in (ii) or (iii) above, or by Vodafone in the circumstances described in
Verizon has agreed to pay Vodafone a termination fee of US$4.64 billion
if the VZW SPA is terminated by Vodafone in the circumstances described
in (ii) above, a termination fee of US$1.55 billion if the VZW SPA is
terminated by Vodafone in the circumstances described in (iii) above,
and a termination fee of US$10 billion if the VZW Transaction is
terminated by Vodafone in the circumstances described in (vii) above.
Verizon and Vodafone give customary representations, warranties,
covenants and indemnities to each other under the VZW Transaction,
including covenants to use their reasonable commercial endeavours to
take the steps necessary to satisfy the conditions precedent to
SOURCES OF INFORMATION AND BASES OF CALCULATION
i. Unless otherwise stated, the financial information relating to
Vodafone is extracted from the audited consolidated financial statements
of Vodafone for the financial year to 31 March 2013, prepared in
accordance with IFRS.
ii. Unless otherwise stated, the financial information relating to
Verizon is extracted from the audited consolidated financial statements
of Verizon for the financial year to 31 December 2012 and the unaudited
consolidated financial statements of Verizon for the six months to 30
June 2013, prepared in accordance with US GAAP.
iii. Unless otherwise stated, the financial information relating to VZW
is extracted from the audited consolidated financial statements of
Vodafone for the financial year to 31 March 2013, prepared in accordance
iv. Unless otherwise stated, the financial information relating to
Vodafone Italy is extracted from the audited consolidated financial
statements of Vodafone for the financial year to 31 March 2013, prepared
in accordance with IFRS.
v. Pro forma guidance for the 2014 financial year assumes foreign
exchange rates of £1:€1.17 and £1:US$1.52. It excludes the impact of
impact of licences and spectrum purchases, material one-off tax
settlements, restructuring costs, purchase accounting adjustments on the
Italy Transaction and the proposed acquisition of Kabel Deutschland. It
also assumes no material change to the current structure of the Group or
any fundamental structural change to the Eurozone.
Vodafone per share information assumes 48,450,408,385 ordinary
Vodafone shares in issue.
Verizon per share information based on closing price as at 30 August
Unless otherwise stated, exchange rates of £1 = €1.1698 and £1 =
US$1.5482 have been used, being the exchange rates at 11.00 a.m. in
London on 30 August 2013.
The following definitions apply throughout this announcement unless the
context requires otherwise:
CREST Depositary Interests;
the circular to be sent to Vodafone shareholders setting out full
details of the Transactions and convening the Court Meeting and the
Citigroup Global Markets Limited;
the High Court of Justice of England and Wales;
meeting of Vodafone shareholders convened under the directions of
the Court to approve the Scheme;
earnings before interest, taxation, depreciation and amortisation;
U.S. Federal Communications Commission;
"Free Cash Flow"
operating free cash flow after cash flows in relation to taxation,
interest, dividends received from associates and investments and
dividends paid to non-controlling shareholders in subsidiaries but
before licence and spectrum payments;
Vodafone general meeting to be convened for shareholders to approve
the Transactions, the Scheme and certain related matters;
Goldman Sachs International;
Kabel Deutschland Holding AG;
the rules and regulations made by the Financial Conduct Authority in
its capacity as the UK Listing Authority under Part 6 of the
Financial Services and Markets Act 2000, and contained in the UK
Listing Authority's publication of the same name;
"London Stock Exchange" or "LSE"
London Stock Exchange plc;
last twelve months;
NASDAQ stock market;
US$130 billion less the consideration for the Vodafone Italy
Transaction, estimated payment of taxes and the assumption by
Verizon of Vodafone net liabilities relating to the US Group;
New York Stock Exchange;
the official list of the UK Listing Authority;
EBITDA less capital expenditure;
a reorganisation prior to completion of the VZW Transaction so that
the RoW Interests will be held by Vodafone outside the US Group;
"Return of Value"
the expectation that Vodafone shareholders will receive all the
Verizon shares and US$23.9 billion of cash;
non-US interests acquired by Vodafone in the merger with AirTouch
Communications Inc. in 1999 together with other non-US interests
acquired over time;
the scheme of arrangement between Vodafone and its shareholders
under Part 26 of the Companies Act 2006, pursuant to which it is
proposed that the VZW Transaction and the Return of Value will be
implemented and Vodafone's capital redemption reserve and share
premium account will be cancelled and reduced respectively, subject
to approval and confirmation by the Court, on the terms set out in
together, the VZW Transaction and the Vodafone Italy Transaction;
"UKLA" or "UK Listing Authority"
the Financial Conduct Authority in its capacity as the competent
authority for listing under Part 6 of the Financial Services and
Markets Act 2000;
United States generally accepted accounting principles;
Vodafone's US group whose principal asset is its 45% interest in
Vodafone 4 Limited;
Vodafone Americas Finance 1, Inc.;
Verizon Business International Holdings B.V.;
Vodafone Europe B.V.;
"Verizon" or "VZ"
Verizon Communications Inc.;
intention of the Verizon Board to recommend that Verizon
stockholders vote in favour of the requisite resolutions at the
Verizon Stockholders Meeting to approve the Transactions;
the trading name of Cellco Partnership;
Vodafone American depository receipts;
"Vodafone Group" or "Group"
Vodafone Group Plc and, where relevant, its subsidiaries;
Vodafone Omnitel N.V.;
"Vodafone Italy Transaction"
the intended acquisition by Vodafone of Verizon's 23% minority
interest in Vodafone Italy;
"Vodafone Italy SPA"
agreement between Vodafone's subsidiary VEBV, the current holder of
77% of the shares in Vodafone Italy, and Verizon's subsidiary
VBIHBV, the current holder of 23% in Vodafone Italy pursuant to
which VBIHBV will sell its 23% stake in Vodafone Italy to VEBV;
intention of the Vodafone Board to recommend that shareholders vote
in favour of the requisite resolutions at the General Meeting and
Court Meeting to approve the Transactions;
holders of Vodafone shares;
agreement between Vodafone, V4L and Verizon for Verizon to acquire
all of the outstanding stock in VAF1; and
intended disposal of Vodafone's US group whose principal asset is
its 45% interest in VZW.
For the purposes of this announcement, "subsidiary", has the meaning
given in the Companies Act 2006.
All references to "pounds", "pounds Sterling", "Sterling", "£", "pence",
"penny" and "p" are to the lawful currency of the United Kingdom. All
references to "Euros" or "€" are to the lawful currency of the European
Monetary Union. All references to US$ are to the lawful currency of the
United States of America.
All the times referred to in this announcement are London times unless
References to the singular include the plural and vice versa.
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