Verizon sued by shareholder over $130 billion Vodafone deal
By Jonathan Stempel
NEW YORK (Reuters) - Verizon Communications Inc has been sued by a shareholder seeking to void its $130 billion buyout of Vodafone Group Plc's stake in the companies' wireless joint venture on the grounds the price is too high.
In a lawsuit filed in a New York state court on Thursday, just three days after the transaction was announced, Natalie Gordon said Verizon shareholders are being "shortchanged" by the purchase of Vodafone's 45 percent stake in Verizon Wireless, the largest U.S. mobile phone operator.
Verizon, which owns the other 55 percent, agreed to pay Vodafone $59 billion in cash, $60 billion in stock and other sums. Verizon Wireless has about 100 million customers.
Gordon said "it is evident that Verizon has overpaid," adding that "Wall Street analysts concur" and that Moody's Investors Service downgraded Verizon's credit.
She also pointed to a drop in Verizon's share price to $45.08 on September 3, the first trading day after the purchase was announced, from a peak of $48.60 on August 29, when news that Verizon and Vodafone had revived talks surfaced. The lawsuit characterized the 7.2 percent decline as "almost 10%."
The lawsuit seeks class-action status, and also names Verizon Chief Executive Lowell McAdam and 12 directors as defendants, accusing them of breaching their fiduciary duties.
It seeks to force Verizon to rescind the purchase or improve the terms, and force the individual defendants to pay damages.
"We believe this lawsuit is entirely without merit, and Verizon intends to defend itself vigorously," Randal Milch, Verizon executive vice president and general counsel, said in a statement. Continued...