Vodafone Deal To Sell Verizon Stake Could Boost UK Economy

Vodafone Deal To Sell Verizon Stake Could Boost UK Economy
NEW YORK, NY - JUNE 07: A Verizon advertisement sits outside of a store on June 7, 2013 in New York City. In a statement today U.S. President Barack Obama defended the government's surveillance programs following a news leak on June 5 that the U.S. government had been obtaining Verizon's phone records for years. The records were obtained through a secret court order which also revealed that the government has been monitoring business phone calls both nationally and internationally. (Photo by Spencer Platt/Getty Images)
NEW YORK, NY - JUNE 07: A Verizon advertisement sits outside of a store on June 7, 2013 in New York City. In a statement today U.S. President Barack Obama defended the government's surveillance programs following a news leak on June 5 that the U.S. government had been obtaining Verizon's phone records for years. The records were obtained through a secret court order which also revealed that the government has been monitoring business phone calls both nationally and internationally. (Photo by Spencer Platt/Getty Images)
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If Vodafone sells its stake in Verizon for £84 billion - as appears to be on the cards - the impact will be so big that you might actually feel it. And not only if you have stock in Vodafone.

Analysts suggest that the deal, one or the largest ever, would positively impact the UK economy.

The company has confirmed it is in "advanced discussions" to dispose of its 45% interest in Verizon Wireless in what would be one of the biggest transactions in corporate history.

Cash from the deal returned to UK shareholders is expected to provide what is effectively a fresh dose of quantitative easing to stimulate the economy - to add to the Bank of England's £375 billion programme of asset purchases.

Pension funds with investments in the widely-held stock also stand to benefit.

However there is likely to be controversy over the way the deal is arranged amid reports that Vodafone's tax liabilities will be minimised by completing the transaction through its Luxembourg subsidiaries and other offshore companies.

The UK firm's board was said to have met yesterday to approve the deal to sell its stake to its US partner Verizon.

In a statement, it said: "Vodafone confirms that it is in advanced discussions with Verizon Communications Inc regarding the disposal of Vodafone's US group whose principal asset is its 45% interest in Verizon Wireless for 130 billion US dollars."

It said the deal would comprise a mixture of Verizon shares and cash.

Shareholders in FTSE 100-listed Vodafone are predicted to receive a special dividend of up to £40 billion.

According to financial services group Hargreaves Lansdown, an investor holding £5,000 of Vodafone shares might receive £2,000, with no further tax to pay as long as it is held in a pension fund or individual savings account (ISA).

Investors without direct shareholdings are likely to benefit through their pensions, with many funds holding up to 10% in Vodafone stock.

Shares in the mobile phone giant have leapt more than 8% over the past week in anticipation of the deal.

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