UK telecoms giant Vodafone is selling its 45 per cent stake in Verizon Wireless in the US in what is one of the biggest transactions in corporate history. But what does it mean for Irish shareholders?
How many Irish shareholders does it have?
Thanks to the flotation of Eircom in 1999, Vodafone has a substantial shareholding in Ireland. When it acquired Eircom's mobile unit Eircell in 2000, some 450,000 Eircom shareholders received shares in the British telecoms giant. Since then, about 50,000 have sold their holdings, with most choosing to wait and see, given the poor performance in the Vodafone share price, which, up until recently, had lost half of its value since 2000.
What does the deal mean for shareholders?
Shareholders in Vodafone could be in for a windfall on two fronts. Firstly, they will have seen the stock price stage a recovery, as over the past week shares in Vodafone have surged and are now at their highest level since 2001.
Secondly, shareholders are now in line for a reward, as the telecoms giant gets ready to distribute $84 billion, in a mixture of cash and Verizon shares, back to its shareholders.
It is not yet clear in exactly what proportion shareholders will receive cash and Verizon shares.
Does this mean that original Eircom shareholders will make their money back?
It's been a long road for Eircom shareholders, but the recent advance in the Vodafone share price means it is now edging closer to the original flotation price of €3.90. And, thanks to the contribution from dividends along the way, shareholders are close to getting their money back.
While returns may still be less than had originally been expected, Aengus Wilson of Investec Wealth Management notes that, nonetheless: “An Irish investor in Eircom has fared far better than the vast majority of European telecoms”.
How can I sell my shares? A stockbroker informed me that they wouldn't do the trade for me.
If you are looking to cash in on the price bounce and sell out of Vodafone you might be looking for a broker – or you might want to do so once you reap the rewards of the deal in 2014.
However, given the small shareholdings many investors in Vodafone have, doing such a trade is simply uneconomical for many brokers – and they won’t do it.
So, the option is to look for an execution-only broker who might do it, or to transact the trade through Vodafone’s share registrars, Computershare.
According to the group, you can expect to pay 1 per cent of the value of your shares, plus £35 for a certificate trade over the phone, or 1 per cent plus £25 for a nominee account.
If you want it transacted in euro, the transaction costs are higher, at 1 per cent plus €60 for a certificate account.
Doing the trade with Computershare online is cheaper, at 1 per cent, or a minimum of £25 (€32) for a nominee account; or a minimum of £30 (€40) for a certificate account. And remember that UK stamp duty, at 0.5 per cent, applies to all trades.
When it comes to Verizon shares, Vodafone said that it will set up a dealing facility for small shareholders, who have fewer than 50,000 Vodafone shares, to cash in their Verizon shares on completion.
