It was rumored last week that both Verizon Wireless and Vodafone were having discussions over a possible buyout of the latter’s 45 percent stake in Verizon. Vodafone had confirmed the talks a few days ago. Yesterday it was rumored that both parties might make an official announcement on Monday, which is today. The rumor has turned out to be true. Verizon Wireless has just confirmed the $130 billion deal which will take away the entire Vodafone stake.
This transaction costs Verizon $130 billion, which it will pay primarily in cash and stock. Verizon will pay $58.9 billion in cash to Vodafone, the rest will be covered by common stock to the tune of $60.2 billion. It will be distributed to Vodafone shareholders, subject to a collar arrangement with a floor and cap price of $47 and $51 respectively. In addition to this Verizon will also issue $5 billion in notes to Vodafone and will sell its 23.1 percent stake in Vodafone Omnitel N.V. to Vodafone for $3.5 billion. The remaining $2.5 billion will be a combination of “other consideration.” The transaction has been approved by the boards of directors of both Verizon and Vodafone. Subject to shareholder and regulatory approval, this transaction is expected to be closed in the first quarter of 2014. Once it is closed, Verizon will have 100 percent ownership of the largest wireless carrier in the U.S.