Vodafone has confirmed it has sold its 45% share in Verizon Wireless to US operator Verizon for $130bn.
The deal, one of the biggest in corporate history, marks the end of a 13 year relationship between the two companies. Verizon has tried to buy out Vodafone's stake for several years, with any potential deal breaking down over price. While the relationship between both parties was formerly subject to tensions, it is understood to have mellowed in recent years. Since he was appointed CEO of Vodafone Group, Vittorio Colao's policy has been to exit assets where the company did not have a controlling stake.
Vittorio Colao, Vodafone Group CEO, said: 'We are pleased that our long and successful partnership with Verizon will yield a significant return of value to our shareholders, rewarding them for their continuing support of Vodafone’s investment strategy, and we wish Lowell [McAdam - Verizon chairman and CEO] and the Verizon team continuing success over the years ahead. As a result of the transactions, we will also greatly enhance Vodafone’s long-term prospects through Project Spring, our new programme of additional organic investments in 4G, 3G, fibre and broadband, enterprise services and improved customer experience across all of our markets.
'Project Spring will strengthen and accelerate our existing Vodafone 2015 strategy, enabling us to take even greater advantage of the growing global demand for ubiquitous high-speed data. This will in turn underpin our intention to grow the dividend per share annually, in line with our track record of providing shareholders with sustainable and high quality returns.'
The deal will comprise a combination of $58.9bn in cash and $62.0bn of Verizon stock issued to Vodafone shareholders. The remaining $9bn will be funded by notes payable to Vodafone and the sale of Verizon's stake in Vodafone Omnitel to the British company.
As expected, Vodafone shareholders are set to receive $84.0bn in shares and cash but the operator surprised investors by revealing the deal will boost its dividend by 8% to 11p.
Verizon's Lowell McAdam said: 'These transactions mark the culmination of a sustained and highly productive relationship between Verizon and Vodafone, and provides a very strong foundation for both companies to achieve their respective long-term strategic goals. I wish Gerard, Vittorio and the Vodafone team all the best for the future.'
Author: Graeme Neill