Verizon will own its wireless business outright after agreeing to a $130 billion deal to buy the 45 per cent stake of Verizon Wireless owned by British cellphone carrier Vodafone.
The buyout, the second-largest acquisition deal on record, would give Vodafone PLC additional cash to pursue its expansion ambitions in Europe. Those ambitions include its push to buy up other cellphone providers and to expand into the lucrative world of mobile services.
The deal announced Monday would also give Verizon Communications Inc., the opportunity to boost its quarterly earnings, as it would no longer have to share a portion of proceeds from the nation's No. 1 wireless carrier with Vodafone.
The deal still has requires approval by regulators and shareholders of both companies. It is expected to close in the first quarter of 2014.
It isn't expected to have much of an effect on Verizon consumers or on the company's operations. Vodafone had little influence on Verizon Wireless' day-to-day operations, and the two companies have kept out of each other's territory.
The Verizon-Vodafone partnership started in 2000, when what was then Bell Atlantic combined its East Coast wireless network with Vodafone's operations on the West Coast. Vodafone had entered the U.S. market a year earlier by outbidding Bell Atlantic to buy AirTouch Communications Inc. of San Francisco.
The windfall from the buyout will give Vodafone, already one of the world's largest cellphone companies, substantial funds to buy other providers — or pay down its debt.
Verizon has had a long-standing interest in buying out its partner, but the two companies hadn't agreed on a price until now.
Vodafone has long wanted to get a divorce from Verizon. Published reports say earlier talks on a sale broke down over price and tax concerns. The sale will also allow Verizon to expand abroad — as Vodafone could nix expansion under the terms of now defunct joint venture. Verizon will pay $58.9 million in cash and $60.2 billion in stock. It will also issue $5 billion in senior notes payable to Vodafone and sell its 23.1 per cent minority stake in Vodafone Omnitel NV to Vodafone for $3.5 billion. The remaining $2.5 billion will be paid in other ways.