This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

The Deal: Verizon Gets Full Control of Wireless Unit in $130 Billion Deal

By Jonathan Braude and Andrew Bulkeley

Phone giant Verizon Communications Inc. (VZ) late Monday finally confirmed the details of its hard-fought $130 billion cash-and-stock agreement to buy a 45% stake in Verizon Wireless from it U.K. partner Vodafone Group PLC (VOD) in the biggest deal since Vodafone bought Germany's Mannesmann AG for ¿180 billion ($238.8 billion) in 2000.

In an announcement after the London market closed on Monday, New York-based Verizon said it will pay Vodafone $58.9 billion in cash, funded, as expected, with a $61 billion bridge loan from JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Bank of America (BAC) and Barclays PLC (BCS).

The American company said it will also issue common stock, currently valued at about $60.2 billion to be distributed to Vodafone shareholders, as well as $5 billion in loan notes payable to Vodafone. It will also sell its 23.1% minority stake of Vodafone's Italian business, Vodafone Italia, or Vodafone Omnitel NV, to the British company for $3.5 billion. It said it will finance the remaining $2.5 billion through a "combination of other considerations." Vodafone clarified in a separate statement that this includes "the assumption by Verizon of Vodafone net liabilities relating to the U.S. group."

Vodafone, of Newbury, England, said the price represented an "attractive" enterprise value of 9.4 times trailing 12 month Ebitda and 13.2 times trailing operating free cash flow.

The agreement ends years of speculation about the venture, which started in 1999 with Vodafone's entry into the U.S. market.

Vodafone and Verizon ended up partners after Vodafone outbid Bell Atlantic Corp. in the 1999 auction of Airtouch Communications Inc. Fearing the competition, Bell Atlantic then agreed to merge with Vodafone's newly acquired U.S. provider. Eventually the cellular division of GTE Corp. was folded in and the provider was renamed Verizon Wireless, with Verizon holding 55%.

Financing and tax questions had proved obstacles to previous efforts to restructure the ownership.

Verizon said the transaction is dependent on regulatory approvals as well as shareholder votes at both companies and is not expected to close until the first quarter of 2014. To account for market fluctuations in the interim, Verizon said the share price would be subject to a collar arrangement with a floor price of $47 and a cap price of $51 that will determine the maximum and minimum number of shares to be issued to Vodafone shareholders on closing. On this basis, a maximum of 1,280 million Verizon shares and a minimum of 1,179 million Verizon shares will be payable, Vodafone said.

Stock quotes in this article: VOD, VZ 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,492.47 -9.18 -0.06%
S&P 500 1,877.09 +1.70 0.09%
NASDAQ 4,136.1440 +9.1770 0.22%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs