Shares in the UK mobile phone group, Vodafone, have been affected by concerns that the group could be liable to pay billions of dollars in compensation if US lawsuits seeking to link cancer with mobile phone usage succeed.
Vodafone shares, which Eircell shareholders will receive if the takeover deal is approved, shed 4.5p to close at £2.33 sterling (€3.75) in London yesterday on concerns about the legal actions which have been initiated against one of its subsidiaries. Eircom shares also reacted to Vodafone's problems, losing 15 cents during trading in Dublin to end the day at €2.50.
The legal actions have been initiated against Verizon Wireless, a company in which Vodafone has a 45 per cent stake. The company yesterday dismissed Vodafone suggestions it could be liable to pay out huge compensation claims as a result of the action.
For Eircom shareholders, the drop in Vodafone's share price creates greater uncertainty. If Vodafone shares remain under pressure and move below £2.20 Eircom can pull out of the deal. Even if the shares remain marginally above this price, the lower the value of Vodafone shares the lower will be the price put on Eircell shares. Vodafone shares traded as low as £2.30 yesterday and at £2.33 are 40p lower than when the negotiations to purchase Eircell became public in October.
The £2.33 share price puts a value of €1.77 on the demerged Eircell shares based on the proposed rate of 0.9478 Vodafone shares for every two Eircell shares under the terms of the deal. Mobile phone companies across the globe will now face fresh legal action from brain tumour victims in the US. Newspaper reports claim that a US lawyer, Mr Peter Angelos, who recently helped win $4.2 billion (€4.54 billion) in damages from the tobacco industry, was planning to launch 10 claims against handset manufacturers, mobile network operators and fixed-line phone companies.
Verizon Wireless, the largest US mobile operator, will be named in nearly all of the actions.
The news comes amid continued concern among some mobile phone users that radiation from handsets could cause brain tumours, despite research that has failed to find any link.
Vodafone Group Plc said UK government-sponsored research published this year gave mobile phones a clean bill of health. Company spokesman Mr Mike Caldwell said he did not know of any legal cases that named Vodafone directly, but it would defend itself very vigorously if necessary.
A Maryland neurologist filed an $800 million lawsuit against handset maker Motorola Inc in August as well as eight other telecommunications companies and organisations, claiming that his use of cellphones caused a malignant brain tumour.
But there is no irrefutable medical evidence that mobile phones cause brain tumours or other medical problems.
