In one of the largest deals in global corporate history, Verizon Communications Inc. agreed to pay $130 billion to buy Vodafone Group’s 45% stake in Verizon Wireless and take full control of the nation’s top wireless carrier. The deal was announced by Vodafone after the close of trading on the London Stock Exchange.
The two firms said Vodafone would get $58.9 billion in cash, $60.2 billion in Verizon stock, and an additional $11 billion from smaller transactions that would take the total deal value to $130 billion.
The British group will return 71 percent of the net proceeds to shareholders. All the stock will go to shareholders, plus $23.9 billion in cash, after the deal is finalized, likely to be in the first quarter of 2014.
The deal in cash and stock will give Verizon full access to the profits from the United States’ largest mobile operator, handing it fresh firepower to invest in its mobile network and fend off challengers in a tough market that is fast becoming even more competitive, Reuters says.
“This is great news for Verizon on many fronts,” said Jeff Kagan, an independent technology industry analyst. “One of which is the world is rapidly moving toward wireless, and there are still enormous opportunties for growth going forward.”
“It’s the best-run wireless operator in the U.S., and by some measures maybe the best-run wireless operator in the world,” Craig Moffett, an analyst at Moffett Research LLC, said on Bloomberg Television before the agreement was announced.
Verizon has been trying for more than a decade to win back control of its wireless business — the most profitable in the United States.
Chief Executive Lowell McAdam and Verizon Chief Financial Officer Francis Shammo spent time discussing the deal with Verizon’s largest shareholders, Mr. McAdam said.
The move to sell out of the joint venture closes a heady expansionist chapter for Vodafone, one of Britain’s best-known companies, which grew rapidly over the last 20 years through a spate of aggressive deals, taking its brand into more than 30 countries across Europe, Africa and India.
Verizon Wireless was created in 2000 as a joint venture between the two companies following a string of mergers that had altered the contours of the mobile-phone industry. The company merged its assets in the South and on the East Coast with Vodafone’s business in the West and Rocky Mountains.
Verizon took 55% of the company and had operational control. Vodafone owned the rest and could block major moves. Almost ever since then, Verizon has wanted to own the whole thing, reports the Wall Street Journal.
The deal will become the third largest announced deal in the world after Vodafone’s $203 billion takeover of Germany’s Mannesmann in 1999 and AOL’s $181 billion acquisition of Time Warner the following year. Verizon has also managed to raise one of the largest ever financing packages at $60 billion.
“We think we have a balanced approach here,” Colao told reporters, adding that he was “super committed” to the next chapter of the company. “We are reducing our debt level which will enable the company to be very robust and take opportunities if they arise.”