A couple of weeks ago rumors were circulating that Verizon might finalize a deal with Vodafone to buy the latter’s 45 percent stake. Last week Verizon finally announced that the deal had been reached to the tune of $130 billion. Under the deal, Verizon pays the British telecommunications giant $59 billion in cash and another $60 billion in its stock and other considerations. A lawsuit has now been filed in a New York state court by Natalie Gordon. She claims that Verizon’s shareholders are being “shortchanged” by the purchase of Vodafone’s stake, adding that Verizon has overpaid and that “Wall Street analysts concur.”
Verizon CEO Lowell McAdam and 12 directors have been named as defendants in this lawsuit, they’ve been accused of breaching their fiduciary duties. The lawsuit seeks class-action status, the aim is to get Verizon to either improve the terms of this deal, rescind the purchase or compel individual defendants to pay damages. This lawsuit mentions drop in the carrier’s share price on September 3rd, when it was trading for $45.08 a day after the deal had been announced. On August 29th, when it was rumored that Verizon had initiated talks with Vodafone, the share price was trading at a peak of $48.60. This 7.2 percent decline has been defined as “almost 10 percent” in the lawsuit. Executive vice president and general counsel of Verizon, Randal Milch, said in a statement that the lawsuit is “entirely without merit, and Verizon intends to defend itself vigorously.”
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