Vodafone sells Verizon Wireless stake for $130 billion

U.K. carrier Vodafone has agreed to let go of its 45 percent stake in the Verizon Wireless joint venture for $130 billion in cash and stock.
Written by Charlie Osborne, Contributing Writer

Verizon will pay $130 billion to Vodafone in exchange for the carrier's 45 percent stake in joint venture Verizon Wireless.

In a statement, Verizon said it has entered a definitive agreement with U.K.-based Vodafone after back-and-forth talks to buy out the carrier took place over the last four years.

U.S.-based Verizon says that the 45 percent stake will be taken from Vodafone's hands for $130 billion, primarily consisting of cash and stock. The deal was unanimously approved by the boards of directors of Verizon and Vodafone over the weekend, and is expected to close in Q1 2014.

The buyout deal gives Verizon 100 percent ownership of the joint carrier.

The transaction requires Verizon to pay Vodafone $58.9 billion in cash. In order to fund the buyout deal, the carrier has entered into a $61bn Bridge Credit Agreement with J.P. Morgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Bank of America, N.A. and Barclays.

Vodafone shareholders will also receive Verizon common stock currently valued at approximately $60.2 billion. In addition, Verizon will issue $5bn in notes payable to Vodafone, and Verizon will sell its 23.1 percent minority stake in Vodafone Omnitel N.V. to Vodafone for $3.5 billion. The remaining $2.5 billion balance will be settled in undisclosed ways.

Lowell McAdam, Verizon chairman and CEO, said the buyout will "enhance value across platforms and allow Verizon to operate more efficiently." and "will provide increased opportunities in the enterprise and consumer wireline markets."

Verizon Wireless, founded in 2000, reported $75.9 billion in operating revenues in 2012 and $39.5 billion in the first half of 2013. The company's operating income margin was 28.7 percent in 2012 and 32.6 percent in the first half of 2013. The joint venture is the largest U.S. wireless company currently in operation, and employs 73,400 members of staff.

Vittorio Colao, CEO of Vodafone said:

"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."

Verizon also took the opportunity to announce a quarterly dividend of 53 cents per outstanding share for stockholders, an increase of 1.5 cents per share, or 2.9 percent, from the previous quarter. Annually, this increases Verizon's dividend 6 cents per share, from $2.06 to $2.12 per share.

This post originally appeared on ZDNet.

This post was originally published on Smartplanet.com

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