US telecoms giant Verizon Communications has completed its US$130bn deal to buy out Vodafone from their Verizon Wireless joint venture in the country.
As UK-based Vodafone exits the US in one of the biggest corporate deals ever, it is also taking…
US telecoms giant Verizon Communications has completed its US$130bn deal to buy out Vodafone from their Verizon Wireless joint venture in the country.
As UK-based Vodafone exits the US in one of the biggest corporate deals ever, it is also taking Verizon’s 23% stake in Vodafone Italy to gain full ownership of its Italian subsidiary.
Vodafone is returning around US$85bn of the proceeds to its investors in what CEO Vittorio Colao said is the “largest single return to shareholders in history”.
He recently told journalists that, after setting aside funds to invest in its own network, the company has a war chest of up to US$40bn that it could use for sizeable acquisitions.
For Verizon CEO Lowell McAdam, the deal gives the incumbent telco full ownership of what he described as the largest and most profitable wireless company in the US.
“Acquiring Vodafone’s stake in Verizon Wireless provides us with opportunities for greater financial flexibility, enhanced operational efficiency and innovations that will benefit customers,” he said.
“We are confident it will fuel further growth in our business.”
Verizon issued more than a billion common shares to Vodafone for the stock portion of the deal. For the cash consideration, it used proceeds from capital markets transactions this month and last September, as well as US$6.6bn borrowed from a term loan on 21 February 2014 on closing the deal.
Guggenheim, JP Morgan, Morgan Stanley and Paul Taubman are Verizon’s lead financial advisers, with Barclays and BofA Merrill Lynch also providing advice.
Vodafone is advised by Goldman Sachs and UBS, with Citigroup acting as corporate broker.
The two mobile operators founded Verizon Wireless in 2000, and it reported US$81bn in operating revenues for 2013 with an operating income margin of 32.1%.
