Verizon Wireless Stake Of Vodafone To Be Acquired By Verizon

Verizon Wireless Stake Of Vodafone To Be Acquired By Verizon

The stake of Vodafone in Verizon Wireless will be acquired by Verizon Communications. This comes after the finalization of an agreement between the two companies.

The $130 billion deal is the third biggest corporate acquisition in history. The acquisition comes behind the $164 billion deal between AOL and Time Warner and the $183 million deal between Mannesmann AG and Vodafone. Verizon Communications will pay around $58.9 billion in cash for the 45 percent stake of Vodafone. The remaining $60.2 billion will come in the form of stocks.

According to Lowell McAdam, CEO of Verizon, the deal will improve the value across platforms and enhance the operations of Verizon. This will allow the company to concentrate on creating high-quality products for its clients. Full ownership of Verizon Wireless will also increase business opportunities and consumer markets for the company McAdam added.

Analysts revealed that the exit of Vodafone from the US wireless market was the best move of the company despite the hedge it provided against the problematic European market. Despite the strong performance of Verizon, stronger competitors are expected to emerge due to recent acquisitions and mergers in the US, CCS insight analysts indicated. In addition, despite the resumption of dividend payments in 2011 to Vodafone, future payments are uncertain.

Verizon Communications has been planning to acquire the stake of Vodafone in Verizon Wireless for a number of years already. The company is the top wireless service provided in the US and is considered as the best-performing and most lucrative component of Verizon.

Discussions of a buyout have increased in recent months. The discussions hinted at the possibility that the buyout will cost Verizon Communications over $100 billion, but were eventually stalled. Informal discussions in March included a possible merger of the two companies.

Legal and banking advisers were hired by Verizon Communications last April to come up with a $100 billion bid for the stake of Vodafone in Verizon Wireless.

Posted by James Fried on Wednesday September 04 2013, 1:25 AM EST. Ref: CNET. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0