Wednesday, September 4, 2013

Verizon and Vodafone Buyout Agreement

Verizon announced Monday that it will pay $130 billion for the remaining 45% stake in Verizon Wireless owned by Vodafone. This is the second-largest acquisition deal on record. 
Vodafone PLC will get additional cash to expand in Europe and buy other cellphone providers. Verizon Communications Inc. can boost its quarterly earnings, as it would no longer have to share a portion of proceeds. Once the deal closes, Verizon expects EPS to rise by 10%. This deal is expected to close in the 1Q of 2014. 
Under deal terms, Verizon will pay $58.9 million in cash and $60.2 billion in stock, and issue $5 billion in senior notes payable to Vodafone and sell its 23.1% minority stake in Vodafone Omnitel NV to Vodafone for $3.5 billion. The remaining $2.5 billion will be paid in other ways.
Verizon wanted the profits from Vodafone's 45% stake in Verizon Wireless. Verizon feared that fears of pressure on interest rates inspired by U.S. economic recovery could make a purchase more expensive, so it acted quickly.
In the April-to-June quarter, Verizon Wireless added 940k+ devices to its contract-based plans, exceeding analyst estimates and continuing a strong run. It boosted service revenue by 8.3% from a year ago.
Separately, Verizon raised its quarterly dividend by a penny and a half to $.53. That makes its annual dividend $2.12 from $2.06.

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