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Vodafone seizes control of Japan Telecom for £1.8 billion
Not entirely unexpected
Vodafone has increased its bid for world domination by paying £1.8 billion for a controlling stake in Japan Telecom and its J-Phone mobile subsidiary. The money has got it an extra 21.7 per cent in the company (that's a 29 per cent premium on the shares) - providing the all-important 66.7 per cent stake, which means it can hire and fire directors.
Vodafone has made no secret of its intention to take over at Japan Telecom since it bought BT's 20 per cent stake in Japan Telecom and J-Phone for £3 billion back in May. That deal gave Vodafone 45 per cent and 46 per cent respectively.
At the end of August, it managed to install its own man, Darryl Green, as president of J-Phone. And now, just as it did in France and Spain, it has managed to force its way into control of a minor player in the market. J-Phone, which last we heard was second in the Japanese market with 16 per cent share (compared to DoCoMo's 60 per cent) but may now have slipped to third, will most likely change its name to Vodafone.
Vodafone has invested £10 billion already in Japan and is known to be annoyed that J-Phone has failed to compete with DoCoMo.
The £1.8 billion paid is a fair price and what people expected. However, shareholders - which have seen Vodafone's share price consistently fall over the last year thanks to several huge takeovers - may not be so chuffed. Vodafone is now the world's biggest mobile phone company and gaining control of Japan Telecom is no doubt a good plan, but many more big purchases may see people's patience run out.
Japan Telecom is not in the best state either. Just prior to the share announcement, the company gave a profits warning, lowering expected profits from £87 million to £58 million for the year. Pre-tax profit estimate stayed the same at £463 million.
Japan Telecom's share price has gone up 8 per cent; Vodafone's fell 3 per cent but have since recovered to rise a tiny 0.3 per cent. ®