Verizon agrees $130 billion deal with Vodafone

American telecommunication company and the largest wireless provider in the United States , Verizon Wireless has agreed to buy Vodafone’s 45% stake in Verizon making the telecoms company all American again.

The deal agreed today which is worth a massive $130 billion (£84bn/€99bn/20.8 trillion naira) is one of the biggest buyout in history. To be specific, it is the third largest buyout in the history of corporate transactions.

The biggest buyout in history is the takeover of Germany’s Mannesmann by Verizon in 1999 which was reportedly worth $203 billion. The second biggest is the purchase of Time Warner Company by AOL which was worth $181 billion in 2000.

Verizon will pay $58.9 billion in cash, $60.2 billion in Verizon stocks with the remaining $11 billion being paid through smaller transactions. It is expected that the deal will be completed in the first quarter of 2014.

This is a very profitable business for Vodafone who bought 45% stake in Verizon for $70 billion about 14 years ago. It is expected that about $84 billion (which includes the Verizon stock) of the deal will be returned to the stakeholders.

“This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers.

“We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets.” Verizon CEO Lowell McAdam said in a statement.

“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.

“We wish Lowell and the Verizon team continuing success over the years ahead.” Vodafone Group CEO, Vittorio Colao said in a statement.

Analysts have predicted that this deal will have a more positive effect on the British economy than the amount that has been invested in the ailing economy since 2009 as Vodafone is a British company.

Posted in Business, Telecoms