|Vodafone shareholders get US$84b in shares and cash in telco acquisition
Verizon will own its wireless business outright after agreeing to pay US$130 billion for the 45 percent stake in Verizon Wireless owned by British cellphone carrier Vodafone.
The buyout, the second-largest acquisition deal on record, would give Vodafone PLC additional cash to pursue its expansion ambitions in Europe. Those ambitions include its push to buy up other cellphone providers and to expand into the lucrative world of mobile services.
The deal would give Verizon Communications Inc an opportunity to boost its quarterly earnings, as it would no longer have to share a portion of proceeds from the nation's No 1 wireless carrier with Vodafone. It expects its earnings per share will rise by 10 percent once the deal closes.
The deal still requires approval by regulators and shareholders of both companies. It is expected to close in the first quarter of 2014.
Under terms of the deal, Verizon will pay US$58.9 million in cash and US$60.2 billion in stock. It will also issue US$5 billion in senior notes payable to Vodafone and sell its 23.1 percent minority stake in Vodafone Omnitel NV to Vodafone for US$3.5 billion. The remaining US$2.5 billion will be paid in other ways.
Vodafone said its shareholders would get US$84 billion of the deal's net proceeds _ including the Verizon shares and US$23.9 billion in cash.
Vodafone CEO Vittorio Colao said the sale will mean a “very substantial return to shareholders and to the investments relied upon by savers and pensioners.''
“This transaction has the beauty that it allows both to reward shareholders for their support and strengthen the company for future long-term rewards to shareholders,'' he said.
The Verizon-Vodafone partnership started in 2000, when what was then Bell Atlantic combined its East Coast wireless network with Vodafone's operations on the West Coast. Vodafone had entered the US market a year earlier by outbidding Bell Atlantic to buy AirTouch Communications Inc. of San Francisco.
Verizon has had a long-standing interest in buying out its partner, but the two companies had not agreed on a price until now. Analysts said Verizon wanted to pay US$100 billion for Vodafone's stake, while reports suggested that Vodafone was pressing for the US$130 billion it is in line to get.
The largest deal on record is Vodafone's US$172 billion acquisition of Mannesmann AG in 2000, according to research firm Dealogic.
The sale will also allow Verizon to expand abroad. Vodafone has previously been asked could nix expansion under the terms of now defunct joint venture.
Separately, Verizon raised its quarterly dividend by a penny and a half to 53 US cents. That makes its annual dividend US$2.12 from US$2.06.