If you were unplugged for the Labor Day weekend in the USA, then this will be news. Otherwise, it’s just the wrap-up with the actual numbers. The deal has been made: Verizon is paying Vodafone $130B to take full control over Verizon Wireless.
Vodafone will be getting $58.9B in cash, Verizon common stock currently valued at $60.2B plus $5B more in notes payable, the 23.1% stake in Vodafone’s Italian subsidiary that Verizon held at a valuation of $3.5B, and $2.5B of other unnamed financial considerations. Yep, in this gargantuan M&A event, that last $2.5B is enough of a rounding error that it doesn’t need to be specified in detail.
Verizon has arranged $61.0B in bridge financing with JP Morgan, which it will replace with permanent financing arrangements later. However, if they manage to raise more, Verizon does have the right to swap $15B of cash for stock it would have otherwise issued.
Quickly defusing the possibility they might go shopping with the whole proceeds, Vodafone says it will return $84B of the treasure hoarde to shareholders. The biggest piece of that will be all of the Verizon shares, which will go directly to Vodafone shareholders along with $23.9B.
Of the remaining cash, Vodafone is putting £6 toward additional organic investments. That means accelerated 4G rollout in 5 European markets, deeper 3G coverage overall, UC and an extended fiber roleout, and various portfolio additions. And much of the rest will go toward debt reduction it seems.
Of course that doesn’t mean there won’t be funding available for M&A by Vodafone, it’s just that it won’t be of the magnitude it could have been. On the other hand, the idea that AT&T might swoop in and buy the rest of Vodafone doesn’t seem all that unlikely.
As big as the deal is, it won’t take long to close. They’re targeting Q1 of 2014 for that.
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Categories: ILECs, PTTs · Mergers and Acquisitions · Wireless
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