JOHANNESBURG - Vodacom fell more than 7% yesterday after the group reported that its parent company, Vodafone, had sold shares worth R14.8bn to institutional investors to meet the JSE’s 20% free-float requirement.
The Vodafone shares sale comes after Vodacom acquired Kenya’s largest mobile operator Safaricom in a multi-billion-rand deal in May. Vodafone said it sold 90 million shares in its African offshoot at R165 a share, representing a 5.2% interest in Vodacom.
Vodacom’s recent R35bn acquisition of a 35% interest in Safaricom saw Vodafone increase its ownership in Vodacom from 65 to 69.7%. Vodafone said in a statement that it sold the shares to ensure that the local unit met the free-float requirements.
The UK based telecommunications giant said it remained committed to Vodacom and that it intended to retain a controlling majority shareholding in the long term. “The objective of the placing is to ensure that Vodacom meets the free float requirement and to restore Vodafone’s shareholding in Vodacom to a percentage that is broadly similar to that which it held prior to implementation of the Safaricom Transaction,” Vodafone said.
“As part of the Safaricom transaction, Vodafone, therefore, committed to Vodacom that it would sell down a sufficient number of shares to ensure that Vodacom will meet the 20% minimum free-float requirement on the JSE.”
The parties said the settlement and delivery of the placement shares would be concluded next week. Vodacom announced in July its shareholders had overwhelmingly supported the acquisition of a 35% stake in Safaricom, clearing an important hurdle for the transaction.
That deal pushed the proportion of the South African firm’s shares that are traded on the JSE below the exchange’s minimum threshold of 20%. Safaricom is Kenya’s leading integrated communications company, serving over 28m customers with over 100 different product offerings. As the biggest communication company in east and central Africa, Safaricom pioneered commercial mobile money transfer globally through M-Pesa in 2007.
Before the deal, Safaricom was owned by the government of Kenya which held a 35-percent stake, while Vodafone Kenya held a 39.9-percent equity in the company and public investors owning a 25% shareholding in the company.
Yesterday, Safaricom, which reported a profit of $685 million for the year to the end of in March, said its long-term goals had been aided by the completion of the Vodacom transaction. Vodacom said Vodafone would now hold a 64.5% stake.
“Vodacom obtained a temporary dispensation from the JSE to dip below this level to facilitate its circa R35bn purchase of a 35-percent stake in Safaricom from Vodafone,” the company said.
Vodafone said it has agreed not to sell or dispose of any ordinary shares that were not in the placing for a period of 90 calendar days subject to consent by the joint bookrunners.
- BUSINESS REPORT