Vodafone shareholders will vote on Verizon sale

Vodafone officials said yesterday they are not interested in selling or spinning off the companys 45% share of Verizon Wireless, despite pressure from a large shareholder to do so. But it will, by law, have to let its shareholders vote on the issue.

The company announced earlier this week that Efficient Capital Structures, a group that controls 210,000 shares of Vodafone stock, has submitted a seris of resolutions, including one recommending that Vodafone spin off its Verizon’s stake or create a tracking stock. The company’s board of directors rejected those proposal Thursday, but today, a company spokesman told Dow Jones Newswire that by law, it must allow shareholders to vote on the issues at its July 24^th meeting.

Regarding the Verizon stake, the company said, in a prepared statement, that it “has generated significant value accretion for shareholders in recent years reflecting its market leading position, superior growth and cash generation,” and that it was in the shareholders’ best interest to maintain ownership.

Vodafone’ board of directors has considered “alternative structures, including tracking shares and spin off options,” but concluded that these options don’t maximize the value of its Verizon assets. Tracking shares would likely be discounted in valuation “given their complexity, lack of transparency and limited rights,” the company stated. Spin-off structures also would “trade at a material discount to the value of the underlying shareholding given the complexities in achieve favorable tax status, the indirect nature of the shareholding and the Board’s view that the U.K. is not the natural listing for such securities,” Vodafone said in its statement.

The ECS proposal for the Verizon stake was one of several made by the group, which is backed by former Marconi executive John Mayo. Among the other resolutions was a plan to issue $70 billion in bonds to shareholders and a proposal to require shareholder approval of smaller acquisitions