Safaricom Plc, East Africa’s largest telecommunications provider under the leadership of Dr. Peter Ndegwa as CEO, is undergoing a massive ownership restructuring following a multi-billion-dollar agreement that will see Vodafone Kenya Limited significantly increase its stake.
The deal, valued at approximately KES 204.3 billion (USD $1.6 billion), involves the acquisition of a substantial portion of the Kenyan Government’s holding.
This strategic transaction not only solidifies Vodafone’s control but also involves an internal reorganisation within the Vodafone Group and a key agreement regarding future dividend payments.
The USD $6 Billion Acquisition
The central component of the deal is the purchase of a 15.0% stake in Safaricom Plc from the Government of Kenya.
Shares Acquired: USD $6,009,814,200 ordinary shares.
Price Per Share: KES 34.
Total Consideration: KES 204.3 billion (approximately USD $1.6 billion).
Important to note is that the government’s sale of this stake will result in Vodafone Kenya Limited, which is being steered by Mohamed Shameel Aziz Joosub as CEO, increasing its total shareholding in Safaricom to a controlling majority.
Internal Group Consolidation and 55% Majority
The acquisition from the Government of Kenya is being executed alongside a crucial internal reorganisation within the Vodafone Group structure:
Vodacom Group Limited, which currently holds an 87.5% stake in Vodafone Kenya, will increase its ownership to 100%.
This involves purchasing Vodafone International Holdings B.V.’s stake, resulting in Vodacom acquiring an indirect 4.99% stake in Safaricom Plc.
The cumulative effect of the purchase from the Government of Kenya and this internal restructuring will result in Vodafone Kenya Limited holding a massive 55.0% shareholding in Safaricom Plc, thereby securing outright control of the company.
Upfront Payment for Future Dividends
In addition to the primary share purchase, the deal includes a unique financial mechanism related to future returns:
Dividend Rights Purchase: Vodafone has agreed to buy the right to receive future Safaricom dividends corresponding to the acquired stake.
Upfront Payment: For this right, Vodafone will make an upfront payment of KES 40.2 billion (approximately USD $309 million) to the Government of Kenya. This arrangement provides the Kenyan government with immediate liquidity from future expected earnings.
No Takeover Intention
Despite acquiring a controlling 55.0% majority, Vodafone Kenya Limited maintains that it does NOT intend to launch a takeover offer of Safaricom; a statement intended to reassure minority shareholders and the market regarding its intentions for the company’s governance and public listing status.