Verizon looking to buy Vodafone stakes for $130 billion in Verizon Wireless

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Verizon Communication and Vodafone have struck a deal whereby Verizon will acquire Vodafone’s stake in their Verizon Wireless joint venture in the third largest corporate acquisition of all time.  The price tag for this acquisition is $130 billion.

The largest corporate acquisition was Vodafone’s $183 billion for Mannesmann AG and AOL’s $164 billion deal for Time Warner was the second biggest.

In the Verizon deal, “Verizon will pay $60.2 billion in stock and $58.9 billion in cash for Vodafone’s 45 percent share.  This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers,” Verizon CEO Lowell McAdam said in a statement. “We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets.”

“Although the US wireless market provided an important hedge against its struggling European operations”, analysts believe that Vodafone’s exit from the market is a positive move for Verizon.

“The timing of the sale, which has been the subject of speculation for years, appears shrewd,” analysts at CCS Insight said. “Although Verizon continues to show strong performance, recent merger and acquisition activity in the US points to the emergence of stronger competitors. Further, although Verizon resumed dividend payments to Vodafone in 2011, future pay-outs are not assured.”

This announcement of the buyout comes after Verizon had attempted for many years to buy out Vodafone’s 45 percent stake in Verizon Wireless.  Verizon is the top wireless provider in the US and also the fastest-growing and most lucrative division of Verizon.  The companies have been negotiating for some time now and there were talks of a buyout as well as a merger.

It is believed that Vodafone wanted a better price for the asset.

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