What Vodafone Group plc Shareholders Need To Know About The Verizon Stock Windfall

This morning Vodafone Group (LSE: VOD) (NASDAQ: VOD.US) issued a statement on the number of Verizon (NYSE: VZ.US) consideration shares that will be issued to eligible shareholders, as part-proceeds from the sale of its 45% stake in Verizon Wireless, and explained the way the imminent Vodafone share consolidation will work.

Based on the volume-weighted average trading price of Verizon shares over the 20 days to the close of the  New York Stock Exchange yesterday — which was $47.1852 per share — a total of 1,274,764,121 Verizon common shares are to be issued. This means that, under the return of value, eligible shareholders will get 0.026 Verizon common shares for each Vodafone ordinary share they hold. The Verizon shares will be credited to eligible shareholders next Monday, 24 February.

And Vodafone’s share consolidation will also take place on Monday, at 8am, with shareholders receiving 6 new ordinary shares for every existing 11 Vodafone ordinary shares they hold.  The ratio was decided on a formula comprising the mid-market closing price of Vodafone ordinary share, the a mid-market closing price of Verizon common shares and the prevailing US dollar-sterling exchange rate, as of yesterday, 18 February.  

In order to make the number of issued shares divisible by the consolidation ratio, Vodafone will be buying a grand total of just 8 of its own shares sometime today, and then cancelling 3 of its Treasury shares. So, not all elements of what will be the biggest ever return of value to shareholders involve huge sums of money!

As an illustrative example, and assuming everything is approved by the court on Friday (essentially a formality, but you never know), Vodafone says that the return of value will be equivalent to 102p per Vodafone ordinary share, which will be given to shareholders as 72p in Verizon common shares and 30p in cash. As mentioned, the Verizon shares will be credited to eligible shareholders on Monday, and the cash element will be paid on Tuesday 4 March, with any fractional entitlements being settled the following week, on Monday 10 March.