A man passes by a Verizon Wireless store in Washington, DC.
LONDON/SAN DIEGO: Verizon Communications agreed yesterday to pay $130bn to buy Vodafone out of its US wireless business, signing history’s third largest corporate deal to bring an end to an often fractious 14-year marriage.
The two firms said Vodafone would get $58.9bn in cash, $60.2bn in Verizon stock, and an additional $11bn from smaller transactions in a deal that is due to close in the first quarter of next year.
The British group will return 71 percent of the net proceeds to shareholders, including all of the stock, in a sign that it does not expect to go on a new acquisition spree across its remaining core European and emerging markets.
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.
The deal is also likely to be the defining event in the careers of Vittorio Colao and Lowell McAdam, the chief executives of Vodafone and Verizon, who rebuilt relations between the two sides, which had long argued over issues including the level of dividends to be paid from Verizon Wireless.
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 $181bn acquisition of Time Warner the following year.
“This has been a highly productive partnership in a business with excellent momentum,” Colao said, adding that he was “super committed” to the next chapter of the company. McAdam said simply that the time was right to buy.
The boards of Verizon and Vodafone unanimously approved the sale. The deal will give Verizon full access to the wireless unit’s cash, handing it fresh firepower to invest in superfast mobile networks and fend off challengers in a US market expected to grow more competitive in the coming years. After returning $84bn of the sale proceeds to its shareholders, Vodafone will be left with a $30bn cash pile. Reuters
