Vodafone makes a good deal of SFR exit

Vodafone has agreed to sell its entire 44 per cent stake in the French mobile network, SFR to its 56 per cent shareholder Vivendi for a cash consideration of €7.75 billion (US$11 billion).

The price being paid is a significant premium on the US$9.6 billion that Vivendi was recently reported to be unwilling to exceed.

Vodafone will also receive a final dividend from SFR of €200 million on completion of the transaction. In addition, Vodafone and SFR will enter into a Partner Market agreement that will maintain their commercial co-operation.

A total of £4 billion (US$6.4 billion) of the net proceeds will be returned to shareholders by way of a share buy-back with the remainder of the proceeds used to reduce the group’s net debt. The share buy-back will be carried out after the completion of the existing programme, which is expected to be completed in June 2011.

At end-September 2010 the SFR investment had a carrying value of €4.9 billion in Vodafone’s accounts.

Vodafone’s shareholding in SFR contributed £573 million to Vodafone’s adjusted operating profit in the financial year to end-March 2010, and £284 million in the six months to end-September 2010.

Commenting on the transaction, Vittorio Colao, CEO of Vodafone said: "Our board remains committed to realising maximum value from our non-controlled assets. The sale of our stake in SFR, at an attractive multiple, represents a significant further step in the execution of this strategy. In addition, we have secured a valuable partnership agreement in France which will allow us to continue to deliver compelling cross-border services to both consumer and enterprise customers across the major markets of western Europe.”