Verizon, Vodafone Ready For the Big Day At Last

September 2nd, 2013 by · 2 Comments

In what may eventually prove to have been the least secret M&A dance of the decade, Verizon and Vodafone are supposedly ready to make a deal, at long last. According to the Wall Street Journal, Verizon will be meeting Vodafone’s price of $130B for the 45% of Verizon Wireless the latter holds.

The deal, which could be announced this morning if the boards approve in time, will be made up of roughly half cash and half Verizon stock. There will probably also be some other details at the margins, but basically the details are as the financial press has been suggesting they would be for months now.

In fact, we’ve been talking about this one for so long there’s little new to say here, not about the deal itself nor about what comes next. Will Vodafone go on a shopping spree with its newfound cash hoarde? Or will AT&T swoop in and buy them out first? It’s too early yet to go further down that speculative path than we already have.

That being said, I wonder if Verizon’s more than $60B debt/bond sale to make it happen will suck up all the oxygen for a while, and therefore effectively close the credit market window that’s been open this summer.

Another thread wandering around my mind this Labor Day morning is that this is probably one of those rare M&A events in which nobody gets hurt. Verizon Wireless will go on in the near term as it has been going on, no need for major layoffs nor any integration snafus to worry about. Customers don’t care that Vodafone will be gone, in fact few probably knew they were there in the first place. The banks get the big fees they’re always chasing, European investors will get some sort of nice cash dividend to play with.

And Verizon?  Well Verizon finally gets to emulate Daffy Duck the way they’ve always wanted to and declare Verizon Wireless is ‘mine mine all mine’:

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Categories: Mergers and Acquisitions · Wireless

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2 Comments So Far

  • Manish says:

    Ok, so now Verizon won’t have to pay out multiple Billion$s of dividend to VF year after year and probably will get to expand its wireless or rather retail services outside US specially in the high potential Asian Markets without asking for permission from the Big Daddy of Mobile World (VF) but what else………..whats the real reason of Verizon straining itself SO MUCH for the stake buy out? Any views……….?

  • schmuckinsurance says:

    the major cost i see rob is VZ going double down on wireless with that 60bn in debt at the top of the mkt in pricing, margins, a low in capital intensity and a high in capitalization multiples underpinning those aforementioned variables which will require some fancy footwork to navigate. Not that verizon isn’t up for it but that sort of high wire act is something I don’t think there shareholders & stakeholders fully appreciate as it raises the stakes at the wrong time in wireless.

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