Verizon Communications has reached an agreement to buy Vodafone Group's 45 percent stake in its Verizon Wireless subsidiary for $130 billion. Under the deal, Verizon will take 100 percent ownership of the wireless unit, the largest mobile operator in the U.S.
"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," Verizon CEO Lowell McAdam said in a press release.
[ Get expert advice about planning and implementing your BYOD strategy with InfoWorld's 29-page "Mobile and BYOD Deep Dive" PDF special report. | Keep up on key mobile developments and insights with the Mobilize newsletter. ]
The transaction has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2014, subject to customary regulatory approvals. Verizon will pay a combination of cash and stock for Vodafone's stake.
Verizon has sought to buy out its wireless business, originally formed as a joint venture with Vodafone, for several years. The transaction is unlikely to have a significant impact on U.S. mobile consumers, industry analysts said last week. Vodafone may use the huge windfall to buy smaller carriers and further its pursuit of wireline operations, analysts said.
Verizon will pay Vodafone $58.9 billion in cash, financed by a $61 billion bridge credit arrangement from a group of investment banks. It plans to reduce its commitments under that arrangement later by issuing permanent financing. The company will also issue common stock currently valued at about $60 billion to be distributed to Vodafone shareholders, and will issue $5 billion in notes payable to Vodafone. Verizon will sell its 23.1 percent minority stake in Vodafone Omnitel, an Italian mobile operator, to Vodafone for $3.5 billion. The rest of the transaction will be a combination of other considerations, the release said.
Verizon was willing to pay a sky-high price for Vodafone's stake because of the strategic importance of the deal, said Chetan Sharma, founder and president of Chetan Sharma Consulting. "They will be in control of their own destiny and they clearly believe in their future and that the stake will be worth a lot more in a few years," Sharma said.
Because Verizon stock will make up part of the deal, it's a good one for Vodafone, said analyst Roger Entner of Recon Analytics. "This transaction shows continued faith about the outperformance of of Verizon Wireless and the U.S. wireless market in general," Entner said. "It also allows Vodafone to continue to participate in the upside in the U.S."
Stephen Lawson covers mobile, storage, and networking technologies for the IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com.
No comments:
Post a Comment