German Chancellor Angela Merkel (left) talks to chief executive of Vodafone Group, Arun Sarin, as they arrive at the opening ceremony of the CeBIT computer fair in Hanover, last week. On Friday Softbank Corp. announced that it had agreed to buy Vodafone's Japan business for 1.8 trillion yen. - Reuters
REUTERS:
SOFTBANK CORP. has agreed to buy Vodafone's Japan business for 1.8 trillion yen (US$15.5 billion), realising its dream to become a communications powerhouse with a strong foothold in Japan's US$78 billion mobile market.
The deal also marks the first real retreat from an expansionist strategy that has characterised British-based Vodafone for years, as it faces pressure to focus on its slowing core European operations and return cash to investors.
"We will press them very, very strongly to make it a special dividend," said Richard Marwood, fund manager at Vodafone shareholder AXA Investment Managers, adding that the deal terms were at the top end of market expectations.
Vodafone, which said it had received one more expression of interest for the unit, is to get £6.8 billion in cash, with around £1.5 billion of the £8.9-billion consideration paid in preference shares and the rest via a subordinated loan.
"It's a good outcome because we have an attractive price of £8.9 billion. We will be returning six billion of that to shareholders and that is enhancing to our earnings per share," Vodafone chief executive Arun Sarin told reporters.
BRIDGE LOAN
Vodafone, a serial acquirer that has been involved in some of the biggest deals in the sector, said the Japanese unit's sale did not signal a change in its global strategy.
There has been intense speculation that an exit from the United States could follow Vodafone's Japanese unit's sale.
But CEO Sarin, fresh from seeing off boardroom critics in a rumoured row over strategy, said there were no plans right now to sell its 45 per cent stake in Verizon Wireless, its joint venture in the U.S. with Verizon Communications.
"We have excellent growth in the U.S. ... We are very happy with our position. There are no current plans to exit the business," he said on a conference call.
Sarin, who has already returned £18.5 billion to investors, said the group could further 'refine' parts of its global portfolio where it did not see superior returns going forward. "Vodafone only wants to put capital where it can create superior returns in markets offering a strong local position."
