Monday, September 2, 2013

Verizon and Vodafone Agree on $130 Billion Buyout Deal

Verizon Communications and Vodafone Group Plc reached a deal under which Verizon will acquire Vodafone’s 45% equity stake in Verizon Wireless for $130 billion.  This will give Verizon full ownership of Verizon Wireless.

Lowell McAdam, Verizon chairman and CEO, said: "Over the past 13 years, Verizon Wireless has been a key driver of our business strategy, and through our partnership with Vodafone, we have made Verizon Wireless into the premier wireless provider in the U.S. The capabilities to wirelessly stream video and broadband in 4G LTE complement our other assets in fiber, global IP and cloud. These assets position us for the rapidly increasing customer demand for video, machine to machine and big data. We are confident of further growth in wireless, and our business in its entirety."

Vittorio Colao, Vodafone Group CEO, said: "This 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."

The deal will require regulatory approvals and the approval of both companies’ shareholders. The company expect the transaction to close in the first quarter of 2014.

Under the deal, Verizon will pay Vodafone $58.9 billion in cash, which it will obtain through a fully executed bridge load from J.P. Morgan Chase Bank, Morgan Stanley Senior Funding, Bank of America, N.A. and Barclays. Verizon will also issue common stock currently valued at approximately $60.2 billion to be distributed to Vodafone shareholders, subject to a collar arrangement with a floor price of $47.00 and a cap price of $51.00 that will determine the maximum and minimum number of shares to be issued upon closing of the transaction. In addition, Verizon will issue $5.0 billion in notes payable to Vodafone, and Verizon will sell its 23.1 percent minority stake in Vodafone Omnitel N.V. to Vodafone for $3.5 billion. The remaining $2.5 billion of the transaction value will be a combination of other consideration.