Verizon Communications said on Monday it has agreed to buy out Vodafone Group’s 45% stake in Verizon Wireless for $130 billion, capping its decade long effort to win full control of the most profitable mobile service provider in the United States.
The deal marks the third largest announced acquisition in corporate history, after Vodafone’s 1999 buyout of Germany’s Mannesmann for $203 billion and AOL’s $165 billion takeover of Time Warner in 2000. It also marks British telecom giant Vodafone’s exit from the large but mature US mobile market.
Under the terms of the deal, Vodafone would get $58.9 billion in cash, $60.2 billion in Verizon stock, and an additional $11 billion from smaller transactions that would take the total deal value to $130 billion, Verizon said in a statement. The boards of Verizon and Vodafone have unanimously approved the sale, which is subject to customary closing conditions, and was expected to close in the first quarter of 2014.
Verizon said it expects the transaction to be immediately accretive to earnings per share by about 10%, without any one-time adjustments.
Verizon also said its board declared a quarterly dividend of 53 cents per share, an increase of 1.5 cents, or 2.9%, from the previous quarter. On an annual basis, the hike raises Verizon’s dividend 6 cents, from $2.06 to $2.12 per share.
Voda shareholders to get $84bn in cash & stock
Vodafone said its shareholders would receive about $84 billion in cash and shares after the company completes the sale of its 45% stake in Verizon Wireless to Verizon Communications. All the stock will go to shareholders, plus $23.9 billion in cash, after the deal is finalised.
Vodafone also said it would plough 6 billion pounds ($9.3 billion) into improving its mobile and broadband networks across its footprint over the next three financial years. It said the investment programme dubbed Project Spring would help it boost growth to underpin its increasing dividend payments to shareholders.
It will have a US tax liability of around $5 billion.
“We are pleased that our long and successful partnership with Verizon will yield a significant return of value to our shareholders, rewarding them for their continuing support of Vodafone’s investment strategy,” CEO Vittorio Colao said.