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Verizon Agress to Buy Vodafone’s 45% Stake in Verizon Wireless for $130 Billion

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In case you had been following along in the seemingly monthly-ongoing talks between Verizon and Vodafone over Vodafone’s 45% stake in Verizon Wireless, we thought you’d be interested to learn that they have reached an agreement, unanimously voted on by both boards. Verizon will acquire Vodafone’s 45% stake in Verizon Wireless for roughly $130 billion, giving them 100% ownership of the “industry-leading wireless carrier.”

And that’s that. Will this affect you as a consumer? Only time will tell. 

VERIZON REACHES AGREEMENT TO ACQUIRE VODAFONE’S 45 PERCENT INTEREST IN VERIZON WIRELESS FOR $130 BILLION

Transaction Provides Verizon with 100 Percent Ownership of Verizon Wireless
Enhances Ability to Provide Customers with Seamless and Integrated Services
Transaction Expected to be Immediately Accretive to Verizon’s EPS
Verizon Board Authorizes 2.9 Percent Increase in Quarterly Dividend
NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announced that it has entered into a definitive agreement with Vodafone Group Plc (London, Nasdaq: VOD) to acquire Vodafone’s U.S. group with the principal asset of 45 percent of Verizon Wireless for $130 billion, consisting primarily of cash and stock. Verizon expects the transaction at close to be immediately accretive to the company’s EPS (earnings per share) by approximately 10 percent, without any one-time adjustments.

The transaction was unanimously approved by the boards of directors of Verizon and Vodafone, and is subject to customary closing conditions, including regulatory approvals and the approval of both companies’ shareholders. The transaction is expected to close in the first quarter of 2014.

The transaction would provide Verizon with 100 percent ownership of the industry-leading wireless carrier in the United States. As a wholly owned entity, Verizon Wireless will be better equipped to take advantage of the changing competitive dynamics in the market and capitalize on the continuing evolution of consumer demand for wireless, video and broadband services.

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.”

McAdam continued: “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.”

McAdam concluded: “Verizon Wireless is the greatest wireless company in the world, and a big part of this success was due to the hard work of both partners, Vodafone and Verizon. The timing was right to execute a transaction that benefits both companies and their shareholders. Today’s announcement is a major milestone for Verizon, and we look forward to having full ownership of the industry leader in network performance, profitability and cash flow.”

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.”

Quarterly Dividend Increase

Demonstrating the importance of its dividend policy to deliver value for shareholders, Verizon also announced today that its Board of Directors has declared a quarterly dividend of 53 cents per outstanding share, an increase of 1.5 cents per share, or 2.9 percent, from the previous quarter. On an annual basis, this increases Verizon’s dividend 6 cents per share, from $2.06 to $2.12 per share.

Financing and Approvals

The transaction consideration of $130 billion consists of a combination of cash, Verizon common stock and other items.

Verizon will pay Vodafone $58.9 billion in cash. To fund this portion of the consideration, Verizon has entered into a fully executed $61.0 billion Bridge Credit Agreement with J.P. Morgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Bank of America, N.A. and Barclays. Verizon intends to reduce the commitments under the Bridge Credit Agreement with the issuance of permanent financing. In addition, Verizon expects to maintain capital structure, balance sheet and financial policies consistent with investment-grade credit metrics, in part based on 100 percent access to Verizon Wireless’ cash flow.

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.

Guggenheim Securities, LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Paul J. Taubman served as lead financial advisors to Verizon, and J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC also rendered fairness opinions in connection with the transaction. Barclays and BofA Merrill Lynch served as financial advisors to Verizon.Wachtell, Lipton, Rosen & Katz and Macfarlanes LLP are serving as transaction counsel to Verizon, and Debevoise & Plimpton LLP is advising Verizon on its debt financing.

Conference Call

Verizon executives will hold a conference call for investors and analysts to discuss further details of this transaction at 8 a.m. Eastern time tomorrow, September 3. There will also be a live webcast of the call on Verizon’s Investor Relations website, www.verizon.com/investor, where presentation materials will be posted. Dial-in numbers are 888-455-3018 for domestic callers, and 773-799-3816 for international callers; the passcode is “VERIZON.”

A replay of the webcast will be available within two hours after the call. The webcast will be accessible on Verizon’s Investor Relations Web site, www.verizon.com/investor.

  • zepfloyd

    Farewell Cellco Partnership.

  • Daistaar

    Trust me when I say we’ll be footing that bill.

  • Fred

    As a Vodafone shareholder, I am happy this is finally done. No more cat-and-mouse game with dividends related to VZW’s cash flow. As a VZW customer, I could care less. VZW paid for half of this in new stock issuance (sorry current shareholders but your shares just got diluted), so it’s really only a $65 billion deal. Verizon has a good balance sheet and VZW prints money, so this deal will pay for itself over the next few years especially. With Verizon being close to finishing their LTE build-out, capital expenditures should drop and income should go up.

  • Wyveryx

    We’ve all heard of the great Egress, now we’ve seen it’s counterpart. The great Agress!

  • dickslexicon

    Timmy Typo

  • Michael Mirabella

    This had and has nothing to do with customers. VZ will get back that money in a few years. It makes all the sense in the world. Instead of paying Vodafone, all the profits will go to VZ. Once they make the 130 billion back after say 5 or 6 years (not sure on that could be more or less) all that profit is Verizon’s to keep. As far as day to day operations and network upgrades nothing changes. VZ always had complete control over that.

  • SA_NYC

    People, for god’s sake stop beefing about Verizon while still sticking with it. If you don’t like it, you have choices. And don’t tell me “Well, I like Verizon’s coverage, it’s the best LTE network in the country. I just don’t like [insert gripe: locked bootloaders/high prices/slow phone releases/whatever else you can think of]“, because when you choose a carrier, you choose the whole package. Just like any other product, cars, computers, anything. There are pros and cons to all products, then we weight the price and make a choice. No one is forcing you or me to be on Verizon. And if you say “Well Verizon is the only network with good coverage where I live, so I don’t actually have a choice” then I would say all the more reason to say thank you Big Red.

    If you’ve actually dumped Verizon then I think you are absolutely within reason to kvetch about it. But if you’re still on it, shut up already.

    • KOBALT

      Thank you. It costs money to put towers in areas that done have any.

    • Skittlez

      this is the internet dude. people can say what they want about anything. If we’re on Verizon, and get pissed about locked bootloaders(my case), we can. Sometimes people choose the best coverage in the area because without coverage, that little device is useles. the comments section is to voice your opinion. if you don’t like it, read on.

    • sk3litor

      At this point I’m actually more sick of people saying”no one is forcing you to blah blah blah” people can vent (just like your doing) as much as they want. If you don’t like it just move on. No one is forcing you to read them. See how I did that with the switch-a-roo? :)

    • feztheforeigner

      Something I always find worse than bitching about Verizon are the people who bitch about people bitching about Verizon…

  • Mark C.

    Hmm, I hope it means good things (for Verizon). I bought a lot of VZ stock back in July 2010.

    • StuckOnVerizonForever

      Doubt it. It fell today and is sitting at $47. Don’t see it going higher because of this.

      • mort

        The stock market is closed today. Probably why VZ announced it today. Prevents wild knee jerk reactions of traders.

        • StuckOnVerizonForever

          It fell when this deal was known, but I won’t be surprised if it stays the same.

          • mort

            It wasn’t really known. It was a rumor. Rumors usually don’t have as big as an impact as the official announcement.

            Besides, the rumor caused it to jump up 3% on Thursday. As traders cooled off, the price went back down but still higher than before the rumors. Who knows how high the jump would have been if it was the official announcement on Wednesday night or Thursday morning last week. With VZ announcing it on a closed stock market day, traders will be forced to actually think more about the impact of the buyout. Who knows, maybe VZ’s stock will go down more.

          • mort

            I’m going to guess that it’s going to continue going down due to the larger downturn of the economy and stock market in general in the last few months. Not specifically because of the buyout.

    • Franklin Ramsey

      Well, if they paid for any of the deal by issuing stock, that would cause the price to go down. How much it would go down depends on how much stock was issued in relation to how much was already out there.

  • enigmaco

    Be nice if it helped bring back unlimited data…

    • ßen Murphy

      Mine never left.

      • umbrellacorp

        Butthurt haters downvote.

        • tomn1ce

          I know its like they were forced to give up their unlimited data plan…I still have mine and I don’t have a problem with it :-)

          • enigmaco

            Unlimited won’t be around forever though….which is why I said I wish they would bring in back.

  • StuckOnVerizonForever

    All this money and they still charge out the wazoo for contracts and phones.

  • yummy

    Oh, the people are wheeling
    the piles of gold back and forth again.

  • T-Mobile

    0% (ZERO) innovation.
    $130B-worth stupidity.

  • Jonathan Williams

    How does one agress?

    • Chris

      I thought maybe it was some sort of subsidiary of Verizon.

  • jmsbwmn

    I really don’t see how this will affect Verizon’s business practices. Verizon already had majority ownership, so Vodafone had no control in the day-to-day operations.

    • Trueblue711

      Agreed. The reason they hated Vodafone is because they did NOTHING the entire time. I think it’s more of a benefit for the company, because now Verizon will obtain 100% of their profits instead of splitting it with Vodafone for no reason.

      • GentlemanScholar

        Splitting their profits for no reason? How about they split their profits because Vodafone put up 45% of the initial capital. That sounds like billions of reasons.

        • Trueblue711

          Yeah, they put up the capital with the expectation that they would help grow and maintain the business. Not sit on their ass and do nothing for 10+ years.

          • tomn1ce

            That was smart of vodafone. Sit on the side line and collect a paycheck. Now vzw will retain 100% of the profit. This acquisition is just a business investment that vzw is making to increase their profits.

        • michael arazan

          My question is, why would Vodafone want to sell off their shares so easily when Verizon is pretty much a Cash Cow with nearly 1/3 of the United States as customers , about 100 million people, and are making about $29 billion per quarter, or almost 120 Billion a year total.

          And the reason why Verizon has so much is because they didn’t pay $1 in taxes for 3 years, which would of been around $30 billion a year. Another reason why our country is so in debt because corporations don’t pay sh$t in taxes

      • StuckOnVerizonForever

        Vodafone didn’t even make much. According to their “not happy with investment return”.

    • zepfloyd

      Voda was actually influential for one primary thing – LTE. Back when 4G was on the exploratory roadmap, Voda was a key part in mandating internally that Verizon move to a SIM based network for better international interoperability across the partnership.

  • Ralph Bretz

    I see prices at Verizon going up. They’ll need to recoup the $130 billion from customers.

    • El_Big_CHRIS

      THIS. all jokes aside, i really dont want to see an increase on my bill verizon.

    • jmsbwmn

      Disagree. They will recoup this money over time since half of the profits won’t be funneled into Vodafone’s accounts anymore. No price increase necessary.

      • jmsbwmn

        And for the record, I really hate Verizon right now, so I’m not jumping to their defense. :)

      • LionStone

        You mean, disagress… :-)

        • Nick

          huh??? lol

          • LionStone

            Hah…check the title of the article…

          • jojo

            Article heading: “Verizon Agress to Buy Vodafone’s 45% Stake in Verizon Wireless for $130 Billion”

    • StuckOnVerizonForever

      That’s terrible business strategy. But I mean, it is Verizon.

  • Lucky Armpit

    Congrats Verizon, looks like you put the profits from your Share Nothing plans to use rather quickly. Glad to see you have $130B laying around for charging me more for less.
    Guess I shouldn’t be too bitter since I just spent $300 on a Droid Maxx :) Verizon really does have the best Customer Service in the land as well as a great network.

    • pete grassi

      Glad to see you understand how companies finance deals of this size. Reasons I hate the internet.

      • Lucky Armpit

        I do understand that companies don’t have $130B laying around. The fact that my post was dripping with sarcasm was totally lost on you apparently. Reasons why I hate the Internet: People that push the Submit button before thinking about what they’re posting.

    • umbrellacorp

      How did you snag one for 300?

      • Lucky Armpit

        That’s the on-contract price. I used the wife’s eligibility.

        • Ben Landwehr

          Do you have unlimited? If so, did yyou upgrades your wife’s phone but just activate it on your line so you keep unlimited? Or have you globe done to tiered data?

          • Lucky Armpit

            Nope, lost unlimited when the wife upgraded to an iSheep 5 in November of last year. It’s okay; I was mad like most everyone else but the truth was that we barely used 2GB between us every month. Neither one of us are heavy data users. So we went with the 4GB plan for a little overhead… just in case. I don’t like paying the same amount of money for less product, but Verizon’s customer service and excellent network keep me coming back.

  • DanielP

    Wonder how this will affect verizon… Hopefully for the better.

  • Good_Ole_Pinocchio

    I’m not sure what on going effect Vodafone had on VZW…. But I don’t see anything changing from this for the consumer.