Verizon Communications has announced that it has entered into a definitive agreement with UK-based Vodafone Group to acquire the latter’s US business – which includes the principal asset of 45% of Verizon Wireless – for USD130 billion. The transaction was unanimously approved by the boards of directors of both firms, and is subject to customary closing conditions, including regulatory approvals and the backing of both companies’ shareholders. The transaction, which is expected to close in the first quarter of 2014, will provide Verizon with 100% ownership of the market-leading wireless carrier in the US.
The transaction consideration of USD130 billion consists of a combination of cash, Verizon common stock and other items. Verizon will pay Vodafone USD58.9 billion in cash. To fund this portion of the consideration, Verizon has entered into a fully executed USD61.0 billion Bridge Credit Agreement with JP Morgan Chase Bank, Morgan Stanley Senior Funding, Bank of America and Barclays. Verizon will also issue common stock currently valued at approximately USD60.2 billion to be distributed to Vodafone shareholders, subject to a collar arrangement with a floor price of USD47.00 and a cap price of USD51.00, that will determine the maximum and minimum number of shares to be issued upon the transaction’s closing. In addition, Verizon will issue USD5.0 billion in notes payable to Vodafone, and Verizon will sell its 23.1% minority stake in Vodafone Omnitel (Vodafone Italy) to Vodafone for USD3.5 billion. The remaining USD2.5 billion of the transaction value will be a combination of other considerations.
Vittorio Colao, Vodafone Group CEO, commented: ‘This transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives. Our two companies have had a long and successful partnership and have grown Verizon Wireless into a market leader with great momentum.’