Vodafone, Verizon investors back $130 billion Verizon Wireless deal

LONDON/NEW YORK Wed Jan 29, 2014 12:01am IST

A photo illustration shows the company logo of mobile phone provider Vodafone and some 100 Euro bank notes in Vienna January 16, 2014. REUTERS/Leonhard Foeger

A photo illustration shows the company logo of mobile phone provider Vodafone and some 100 Euro bank notes in Vienna January 16, 2014.

Credit: Reuters/Leonhard Foeger

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LONDON/NEW YORK (Reuters) - Shareholders of both Vodafone (VOD.L) and Verizon Communications Inc (VZ.N) approved Verizon's $130 billion takeover of their Verizon Wireless venture on Tuesday, paving the way for the third biggest deal in corporate history.

Vodafone shareholders voted for one of the biggest payouts ever as 71 percent of the deal's net proceeds - or $84 billion including stock - will be returned to Vodafone shareholders from the sale of Vodafone's 45 percent interest in Verizon Wireless to majority owner Verizon.

"This is the largest single return of value to shareholders in history," Vodafone Chairman Gerard Kleisterlee told the shareholders at a meeting in London.

He said it left Vodafone in a strong financial position and represented "the opening of an important new chapter in the history of Vodafone."

Lowell McAdam, Verizon chairman and CEO, said the purchase will give Verizon more financial flexibility to invest in new technologies. "This is critical because we believe that, when it comes to wireless growth, we are just getting started," McAdam said in a statement.

With Vodafone selling one of its largest divisions and the biggest U.S. wireless service, speculation has mounted that the British firm could itself become a bid target.

AT&T (T.N), the second largest U.S. mobile operator, on Monday ruled out a bid for Vodafone after being forced to make its intentions clear by Britain's takeover panel but bankers and analysts say it may still make a bid in the future.

When asked by an investor about AT&T's reported interest in buying Vodafone, Kleisterlee said: "I read the newspapers as you do, and I cannot comment on the speculation around Vodafone and AT&T at this point of time."

Holders of 99.76 percent of Vodafone's shares backed the Verizon Wireless sale, which is expected to conclude on February 21, with the share consolidation and return of value taking place three days later.

In a preliminary count, about 97 percent of Verizon votes cast were in favor of the proposal, according to the company.

Under the terms of their deal announced in September, Vodafone is to get $58.9 billion in cash, $60.2 billion in Verizon stock, and an additional $11 billion from smaller transactions.

Verizon needed shareholder approval to issue up to 1.28 billion shares to Vodafone shareholders to proceed with the deal.

At its special meeting on Tuesday shareholders also gave Verizon the go-ahead to increase the number of shares issued by an additional 2 billion. This was not a condition for the Verizon Wireless deal, but will allow for additional stock to support Verizon's growth and provide flexibility, the company said.

Verizon shares were down one cent at $47.68 on the New York Stock Exchange after the news. Vodafone shares closed roughly flat at 223.44 pence in London.

(Reporting by Paul Sandle, Kate Holton and Sinead Carew; Editing by Neil Maidment, Tom Pfeiffer and Phil Berlowitz)

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