Vodafone and Verizon update relationship status: $130bn worth of complicated
If we don't pay tax on corporate divorce, and the board's happy
Vodafone has confirmed it is in "advanced talks" with Verizon, which has agreed to pay $130bn to buy out its UK partner - and has apparently found a way to avoid paying tax on the windfall too.
Tax has been the stumbling block to previous deals. Vodafone has made good money on its Verizon investment – it currently owns 45 per cent of America's second-largest operator, and could have been liable for $20bn in capital gains tax. But this deal will, apparently, let the company slip past the exchequer without paying a penny in UK tax.
Last time the deal was discussed, earlier this year, the price was expected to be a little over $100bn, depending on the tax liability. By securing $130bn Vodafone has done well, and by avoiding the taxman the company has served its shareholders well too.
Details of the deal aren't public, but Reuters reckons it will comprise $60bn in cash and the same in Verizon shares, topped up with $10bn in odds and ends the companies have lying around the place. The BBC adds that as Verizon is a US company, owned by a Netherlands-registered shell, there shouldn't be a UK tax liability.
Vodafone itself isn't saying very much at all. The company's statement pegs the deal at $130bn, but cautions that it could yet fall apart. The next announcement is expected Monday evening (UK time), once the Verizon board has had a chance to get into work and vote on the subject. ®
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