Back in April we reported that Verizon was seriously interested in buying back Vodafone’s 45 percent share of the company. Since then, there has been continued speculation and rumors about such a deal. Finally, Verizon has confirmed that an agreement has been reached between the two mobile giants.
Under the terms of the arrangement, Verizon will buy Vodafone’s share of Verizon Wireless for a staggering sum of $130 billion, which will be comprised of $58.9 billion in cash, $60.2 billion in Verizon stock and an additional 11.1 billion from “smaller transactions”.
[quote qtext=”Verizon Wireless is the greatest wireless company in the world, and a big part of this success was due to the hard work of both partners, Vodafone and Verizon. The timing was right to execute a transaction that benefits both companies and their shareholders. Today’s announcement is a major milestone for Verizon, and we look forward to having full ownership of the industry leader in network performance, profitability and cash flow.” qperson=”Lowell McAdam” qsource=”Verizon chairman and CEO” qposition=”center”]
While the agreement was unanimously approved by the board of directors from both companies, the deal isn’t 100 complete just yet. Verizon says the purchase should close by the end of Q1 2014, providing everything goes through without a hitch when it comes to regulatory approvals.
What the deal means for Vodafone
While Vodafone will obviously receive a pretty sizable war chest as a result of this deal, it also marks a change of an era for the company as they exit the U.S. market.
As a company, Vodafone has certainly fallen down in stock value in recent times, with nearly half the stock price than its high during the early 2000s. With $130 billion coming in, Vodafone can not only reward its shareholders but could also turn towards other acquisitions that help the company’s core European operations, or even could use some of the money to expand further into emerging markets.
Either way, this deal has a lot of potential to shake things up for Vodafone (and its competition) going forward.
What the deal means for Verizon
Basically, the immediate result is that Verizon will have full control the company. Verizon will no longer need to share a big chunk of its profits with Vodafone, something the company has been striving to achieve for quite a while. Of course the deal also means that Verizon is taking on a substantial debt in exchange for complete control of their destiny.
Will Verizon grabbing full control mean much for John-Q-Subscriber over at Verizon? With the company taking on more debt, it certainly could affect consumers at some point, if Verizon feels a need to recoup its money through raising prices (let’s hope not!). Additionally, with Verizon having full control over the company’s future, it could also translate to changes in the company’s direction, long-term. Honestly it’s real hard to say for sure.
This is certainly a huge deal for Verizon and Vodafone, and we are very interested to see how it plays out. What do you think of the buyout? Glad to see Verizon regain full control or not?