Mobile leader Vodafone has rejected a restructuring call by an activist investor lobby that would have unlocked up to $75 billion to shareholders, saying such business strategies could have prevented it from recent acquisitions such as Hutch-Essar in India.
Efficient Capital Structures (ECS), a hedge fund backed by telecom equipment maker Marconi Plc's former CEO John Mayo, shot off a letter to Vodafone earlier this week claiming that restructuring could release 17-38 billion pounds in shareholder value and asked that four resolutions be put to vote at the company's July 24 AGM.
However, Vodafone said in a regulatory filing late on Thursday night that its board has reviewed the proposals and "unanimously concluded that continued execution of its clearly stated strategy will deliver greater value for shareholders."
Vodafone shares, which rose nearly two per cent on Thursday after the disclosure of the restructuring call, dropped 1.5 per cent to 156 pence a share in early morning trade on Friday.
Vodafone said the proposed resolutions seek to allow shareholders to give directions to the board at lower voting thresholds and limit its ability to make acquisitions. It would also significantly constrain the board's flexibility in managing Vodafone's global business and implementing its successful strategy to deliver value to shareholders.
However, Vodafone said that the requirement to seek shareholder approval for acquisitions at the low levels would place it at a material disadvantage in competing for assets.
"This type of constraint could have prevented Vodafone from making many of the significant and attractive value creating acquisitions it has made in recent years, such as those in Romania, Turkey and India," the company said.