Vodafone bosses to collect £56m windfall after sale of Verizon Wireless

Vodafone is selling its stake in America's biggest mobile network in the third-largest transaction in corporate history

Vodafone's senior team will collect a £56m windfall when the mobile operator completes the sale of its Verizon Wireless subsidiary next year.

In the third-largest transaction in corporate history, Vodafone is selling its stake in America's biggest mobile network to its joint venture partner,Verizon Communications, for $130bn (£80.4bn), and has promised to return 71% of the money to shareholders.

The return is worth 112p per share and will be paid in a mixture of cash and Verizon Communications shares, delivering significant gains for Vodafone's top managers. The company has disclosed that its full senior team, about 250 people, has accumulated a total of 50m Vodafone shares. The deal will see them collect £16m in cash plus £40m worth of Verizon shares. Chief executive Vittorio Colao will receive more than £10m, a sum nearly equivalent to his £11m remuneration last year.

Each Vodafone investor will see the number of shares they hold roughly halved as part of the deal, to reflect the fact that the valuable US business has been sold. The formula allows shareholders, including Vodafone executives, to lock in recent gains in the company's stock market value by receiving cash and Verizon shares which can be sold quickly. Vodafone's stock has soared to a 12-year high since the deal was announced.

Unlike outside investors, Vodafone executives have not paid cash for their shares, but were given them under incentive plans, meaning much of the Verizon windfall will be pure profit. Colao stands to make a significant gain, because he has not sold a single share in Vodafone since being appointed chief executive, other than to cover his tax bills.

The torrent of money that will flow into the British economy from the deal has been compared to the Bank of England's quantitative easing injections.

The record for such deals is still held by Vodafone's $200bn acquisition of Germany's Mannesmann, while AOL's merger with Time Warner is considered the world's second largest transaction.

Vodafone is one of the most widely held stocks in Britain. Its ability to pay the highest dividend of any blue chip company listed in London has made it a mainstay choice for pension funds. Many executives are expected to re-invest their gains back into Vodafone, which has promised to increase its dividend by 8% to about 11p a share next year.

A Vodafone spokesman said: "A large part of executive remuneration is based on performance and is paid in shares – ensuring alignment of their interests with those of our shareholders."

The windfall process is more complex than a dividend, leaving investors with a mix of cash, Verizon shares and Vodafone stock equivalent to Vodafone's share price the day before the deal closes.

The Verizon return is worth 112p per Vodafone share, and it is expected one in every two Vodafone shares will be cancelled. If the stock price is 224p when the transaction closes, two Vodafone shares would be worth 448p. An investor owning two shares will be asked to trade in one of them, receiving a 224p windfall and being left with a single share worth 224p. The number of shares cancelled will depend on the final stock price. The stock closed at just under 228p on Friday.

Vodafone's involvement in the American mobile industry dates to its acquisition of Airtouch in 1999. Airtouch was then merged with Bell Atlantic in 2000 to form Verizon Wireless. The company they created went on to lead consolidation of America's regional mobile networks, emerging along with AT&T as one of the two dominant players.

Verizon Wireless was valued at $70bn when it was created, while Vodafone's exit implied that its worth 13 years later had increased to nearly $290m.

Article Source : http://www.guardian.co.uk

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Cider's cool new image to lead the way in British export push

No longer the tipple of teenagers and tramps, quality English ciders are now an integral part of the government's plan for economic growth

It was, in the words of one industry executive, the drink of "students, tramps and the Wurzels". But the perception and popularity of cider has been transformed and now the government wants to get in on the act.

Defra and its agency UK Trade and Investment (UKTI) have published a plan to improve British exports – and cider seems to be its trump card. "As one of the world's leading cider producers, the UK is well placed to leverage this growing opportunity," the plan says. "Worldwide, cider sales are rising rapidly and grew by over 50% in both the USA and Australia in 2011-12."

The drink's place in what David Cameron calls the "global race" for growth is a remarkable turnaround for a product whose appeal was once limited to under-age drinkers and those seeking cheap strong booze.

Paul Bartlett of the National Association of Cider Makers said he was delighted the government was waking up to "a gem", and hoped that with promotion and trade missions, cider could enjoy some of the success of Scotch whisky. He added: "There's growth in Canada, the US, Australia and Scandinavia. And there are pockets in Asia, where hopefully the government are going to help. We are looking at Vietnam, Korea, China. It's the holy grail to crack those markets.

"The American beer market has changed dramatically with the rise of craft beers. Consumers are experimenting with different flavours, and looking at the provenance of their drinks. Cider is jumping on the back of that, offering a natural background, the direct link with apples. And men and women both like it, which is important because more drinking is in mixed groups."

Henry Chevalier of Suffolk's Aspall Cyder pointed out that cider is being sold at the top end of the market in America. Restaurants, he said, include Aspall cider on their wine lists, at $26 a bottle, considerably more than its £2.59 UK price tag. Waiters show the label to drinkers before offering a taste, and they store it in ice buckets.

Billboards advertising English cider varieties have appeared in Sydney, exploiting a growing awareness of the drink. And British farmers are waking up to the potential and turning over land to apple orchards.

Chevalier said the change in cider's fortunes came when Bulmers' Irish rival, Magners, launched in Britain in 2005. The following year brought a hot summer and a multi-million pound Magners marketing campaign to encourage serving cider over ice made it the trendy new drink.

But there were other factors in play. "If you go back 15 years, the image was tramps, students and the Wurzels. It was very cheap, it wasn't the best quality and there was a vicious price war going on between Bulmers and Taunton. But when Bulmers owner Scottish & Newcastle was bought by Heineken [in 2008], it was the first time an internationally minded company got hold of a big cider brand. The parochial view was that there was nowhere to sell cider except England. Heineken disagreed, and others have followed."

Article Source : http://www.guardian.co.uk

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