Andre Yoskowitz
2 Sep 2013 18:56
Verizon Communications has agreed to purchase Vodafone's 45 percent stake in Verizon Wireless for $130 billion in one of the largest acquisitions of all time.
The company will finally have full access to the top U.S. wireless carrier, and its large profits.
Vodafone will use the proceeds to invest in their own networks and also to pay back investors through stock buybacks and dividends. Over $80 billion will be returned to shareholders and used to pay down debt. Verizon's CEO confirmed that the companies had spoken about merging, but that a sale was better for both.
The financial terms of the deal are as follows; Vodafone will receive $59 billion in cash, $60 billion in Verizon stock and another $11 billion from a deal that will close in the Q1 2014. Verizon raised $60 billion in bridge financing from multiple banks including JPMorgan Chase.
By purchasing the stake, the company says its earnings per share will jump 10 percent right off the bat. The added debt will likely keep the company from making any other large transactions in the coming years, however. After the deal, Verizon will have debt of $115 billion.