Vodafone sale agreed true value over £3?
It seems like the deal has been struck at $135 billion and Vodafone has released some details. The total deal is valued at £1.12 per share. $60.2 Billion of this will be in shares and will be fully distributed to Vodafone shareholders. A further $23.9 billion will be distributed to shareholders as a special dividend. The rest of the proceeds will be used by Vodafone to reduce debt and for business investment. Vodafone seem very positive about the prospects for the remaining group and have announced that they will raise the dividend for next year by 8% to 11p. This seems amazing at the current share price of £2.13 after the Verizon stake that values the rest of the company at £1.01 with a dividend of 11p. That equated to a yield of 10.89%. I would suggest that if the dividend is reliable that they yield could be at least halved which would mean the value of the remaining stake would be doubled to £2.02. When you add the Verizon stake of £1.12 you could argue that Vodafone’s price should be £3.14 which is a significant premium to the current price.
Vodafone has announced a presentation will be held tomorrow so hopefully there will be more information then and if anything significant I will write another update.