Vodafone Group PLC's (LSE:VOD) told investors that the merger between its UK telecoms arm and Three UK and the sale of its Vodafone Italia business will not need approval from shareholders under new UK listing rules.
Two short statements from the FTSE 100 company on Monday stated that the Three and Italy deals are both classified as 'significant transactions' and so in each case a vote "will no longer be required", following the new listing rules coming into force at the end of July.
The board confirmed that, in its opinion, both transactions are in the best interests of its share and bondholders as a whole.
Under the new listing rules, a significant transition can be completed without shareholder approval provided the companies comply with enhanced disclosure requirements, with the burden of decision-making now resting with the company’s board of directors to allow for faster execution of deals. Disclosures must include the effects of the transaction on the company's earnings, financial position, and potential risks
In the short statement on the Three deal, Vodafone went on to note that it is expected to have a "broadly neutral" impact on Vodafone's ratio of net debt to adjusted profit on an EBITDAaL basis, is expected to be accretive to adjusted free cash flow from the fourth full year onwards, while being accretive to group adjusted EBITDAaL and increasing total assets and total liabilities.
As for risks, it added that the Three transaction may not proceed to completion if regulatory or CK Hutchison shareholder approvals are not granted and that it may incur liability from customary warranties and indemnities as well as ongoing obligations to provide services.
Competition remedies suggested
That is if the deal does go ahead at all, as the Competition and Markets Authority earlier this month raised several concerns ahead of a final decision expected on 7 December.
Later in the morning, Hutchison and Vodafone issued a joint statement to highlight concessions offered to the CMA to get the deal through, including a £11 billion network investment programme and a network sharing agreement and proposed spectrum sale to Virgin Media O2.
The pair said that while they view the CMA's concerns about price increases as "unfounded", they will commit to maintaining tariffs at £10 or below for two years from the completion of the merger for value-focused customers on the SMARTY brand, as well as social tariffs on both the SMARTY and VOXI 4 Now brands, and continue measures to protect registered vulnerable customers.
For the wholesale market, they will provide a 'reference offer' that they say will encourage mobile virtual network operators to access their additional network capacity.
** Update: Adds further details **