Verizon confirms US$130bn mega-deal to buy out Vodafone’s stake

2 Sep 2013

US mobile player Verizon has confirmed that it has entered into an agreement to acquire Vodafone’s 45pc stake in the company for US$130bn in cash and stock. The transaction was unanimously approved by the Verizon board of directors.

The deal will give wireless carrier Verizon 100pc ownership of its own company. The transaction is expected to conclude in the first quarter of 2014.

New York-based Verizon, which began life as Bell Atlantic in 1983, has annual revenues of around US$110bn and employs around 188,000 people.

Future Human

Control over its own destiny will enable Verizon to better compete in a communications market driven by consumer demand for wireless, video and broadband services.

“The capabilities to wirelessly stream video and broadband in 4G LTE complement our other assets in fiber, global IP and cloud,” said Verizon CEO and chairman Lowell McAdam.

“These assets position us for the rapidly increasing customer demand for video, machine to machine (M2M) and big data. We are confident of further growth in wireless, and our business in its entirety.”

“This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers. We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets.”

The CEO of Vodafone Vittorio Colao added: “his transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives. Our two companies have had a long and successful partnership and have grown Verizon Wireless into a market leader with great momentum. We wish Lowell and the Verizon team continuing success over the years ahead.”

Under the terms of the deal Verizon will pay Vodafone US$58.9bn in cash and to do so has entered into a US$61bn bridge credit agreement with JP Morgan Chase Bank, Morgan Stanley Senior Funding, Bank of America and Barclays.

Verizon will also issue US$60.2bn worth of common tock to Vodafone shareholders with a floor price of US$47 and a cap price of US$51.

It will also issue US$5bn in notes payable to Vodafone while Verizon will also sell its 23.1pc minority stake in Vodafone Omnitel NV to Vodafone for US$3.5bn.

The remaining US$2.5bn of the transaction value will a combination of other forms of financial consideration.

Mobile money image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years