Verizon Communications has reached an agreement for the acquisition of Vodafone’s 45% stake in the Verizon Wireless joint venture in a deal worth $130 billion, which gives it full control to the most profitable mobile operator in the United States. The agreement was approved by the boards of both companies and will be completed in the first quarter of 2014, according to a Verizon Communications press release.
Verizon will pay Vodafone $58.9 billion in cash, financed through JPMorgan Chase, Bank of America, Barclays and Morgan Stanley. Verizon will also issue shares worth $60.2 billion to Vodafone shareholders. The acquisition will end a 14-year partnership and will allow Verizon to fully benefit from the wireless division, while Vodafone comes out of a partnership in which it could not control dividend and operations.
After the $130 billion transaction is finalized, the amount is almost equal to Verizon market capitalization and deal would be the largest takeover since Mannesmann’s takeover by Vodafone in 2000.
Vodafone representatives confirmed yesterday the amount in a statement. For the company, holding total control over the wireless operations means access to a revenue of $21.8 billion.
The agreement requires, among other things, for Verizon to give up 23 percent of the shares it holds in Vodafone Italy. The agreement between the U.S. telecommunications company (Verizon) and the UK company (Vodafone) involves both money and stock transaction in an almost equal proportion.
Vodafone will not directly take a major Verizon stock, said the same sources. Instead, it will pass on to its investors the shares received, reducing the money it has to pay to shareholders.
Vodafone CEO Vittorio Colao, is thus trying to put back on its feet operations in Europe after they have been affected by the economic crisis. The British group has lost almost half of its market capitalization since 2000, the year when Verizon Wireless began operating.
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