Verizon, Vodafone agree to $130 billion Wireless deal
By Kate Holton and Sinead Carew
LONDON/SAN DIEGO (Reuters) - Verizon Communications agreed on Monday to pay $130 billion to buy Vodafone Group out of its U.S. wireless business, signing history's third largest corporate deal announcement to bring an end to an often tense 14-year marriage.
The deal in cash and stock will give Verizon full access to the profits from the United States' largest mobile operator, handing it fresh firepower to invest in its mobile network and fend off challengers in a tough market that is fast becoming even more competitive.
For the British group, the accord will allow it to return 71 percent of the net proceeds - or $84 billion including all of the stock - to shareholders while also ramping up investment in its networks to set itself apart from rivals.
The deal, in which Verizon will buy Vodafone's 45 percent stake in Verizon Wireless, is the defining event in the careers of Vittorio Colao and Lowell McAdam, the chief executives of Vodafone and Verizon, respectively. They had succeeded in rebuilding relations between the two sides, long strained by clashes about the Wireless dividend and who would eventually seize full ownership.
McAdam told Reuters in an interview that the two men had initially discussed the possibility of combining Verizon and Vodafone before deciding that the stake sale made more sense for both companies.
He said the companies realized they were close to a deal after they spent the morning together in a hotel in San Francisco, chatting while on the exercise bike in the gym and later over breakfast.
The code name assigned to the deal was Project River. "We were Hudson and they were the Thames," he said, referring to rivers in New York and London.
Under the terms, Vodafone will get $58.9 billion in cash, $60.2 billion in Verizon stock, and an additional $11 billion from smaller transactions in a deal that is due to close in the first quarter of next year. Continued...