Verizon Closes $130 billion deal for Vodafone Stake

By: Zain Nabi  |   August 29th, 2013   |   Business, News

Vodafone Group Plc’s is soon buying a 45 % stake for about $130 billion of Verizon Communication Inc in their U.S. joint venture, according to the latest report of Bloomberg, quoting people familiar with the matter. Several banks are working with Verizon Communication to raise $10 billion from each in funding of $60 billion of the contract and they will soon by September 2 announce the news.

 

The companies have resumed the talks but nobody is sure enough that whether they have resolved the disagreements or not. The disagreement is over the price of the shares, according to the Wall Street Journal. Reuters reported in April that Verizon communication had hired a number of advisors to discuss the deal for a possible $100 billion offer and was considering to offer 50:50 cash and stock for the 45 percent stake in Verizon Wireless which they do not already own.

 

At that time, according to most analysts, the $100 billion offer by Verizon Communication was too low and the value of the share of Vodafone Group Plc’s was near $120 billion. The deal is close to $130 billion, and considered as the biggest deal since the acquisition of Vodafone Mannesmann AG in 2000.

 

“This deal is extremely important for Vodafone for their convergence strategy toward more cable assets because pure mobile operators will certainly experience capacity bottlenecks in the future,” said Leopold Salcher, an analyst at Raiffeisen Capital Management, calling $130 billion “a very good price.”

 

Financial markets see a number of significant changes, such as rising interest rates as well as the cell phone business in the U.S has totally changed that had brought the two sides closer together, said the Journal. According to Vodafone Chairman Gerard Kleisterlee, “the company would seriously consider any offer for its stake in Verizon Wireless if it offered more value to investors than the current status quo.”

 

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