Vodafone Finally Caves, Sells Stake in Verizon Wireless
According to the companies’ press release, the deal was unanimously approved by members of both boards, but it still has to be approved by regulators and shareholders. The companies said they expect the deal to close in the first quarter of 2014.
The $130 billion will be mostly composed of cash and stock options. Verizon will pay $58.9 billion in cash to Vodafone using a $61 billion bridge loan from JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS), Barclays (NYSE:BCS), and Bank of America (NYSE:BAC). Verizon will also give $60.2 billion in common stock to Vodafone shareholders, issue $5 billion in notes to Vodafone, and sell its 23.1 percent stake in Vodafone Omnitel N.V. to Vodafone for $3.5 billion.
The deal gives Verizon complete control over the biggest wireless carrier in the U.S. with the country’s largest 4G LTE network. “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,” the companies said in a press release.
Rumors have also been flying that Verizon Wireless competitor AT&T (NYSE:T) is interested in buying whatever’s left of Vodafone after the British carrier completes its deal with Verizon. AT&T has been looking to buy assets in Europe for a while, and Vodafone’s global assets also match AT&T’s plans to grow its presence in emerging markets.
AT&T is looking to take advantage of the relatively new 4G LTE networks in Europe, which have been a staple in the U.S. for years. Still, AT&T could lose interest if Vodafone decides to use the cash from the Verizon deal to expand into broadband and cable services so that it can begin offering popular “bundle” packages.
While Vodafone’s plans for the cash have not been confirmed, analysts have speculated that the company will either use it to build bundle offerings, pour money into reviving its European businesses hit hard by recession there, or continue to expand profitable ventures in emerging markets like Africa.
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