Verizon Communications is about to buy out the 45 percent stake that Vodafone Group owns in Verizon Wireless. The deal is said to be worth $130 billion. The company plans to raise around $65 billion to fund the deal.
Boards of both Verizon and Vodafone are expected to meet this weekend on their own to approve the proposed deal that could be announced on Monday. This was according to people who are familiar with the matter.
It is still unclear whether Vodafone board has met to talk about the deal and a vote could be delayed. It is also undetermined whether Verizon’s board met during the long Labor Day weekend in the US.
Verizon has tapped Morgan Stanley, JPMorgan Chase, Barclays and Bank of America/Merrill Lynch to help raise the financing via bank loans and bonds. The company plans to pay for another half of the purchase with its own stock.
The four banks have been advising Verizon. Other advisers for the company are former Morgan Stanley banker Paul Taubman and Guggenheim Partners. According to the sources, Vodafone is advised by Goldman Sachs and UBS.
According to the terms of the deal, Verizon Communications will purchase Vodafone’s US holding company, Vodafone Americas that owns the stake in Verizon Wireless and other assets. Verizon will keep the Verizon Wireless stakes and sell the European assets back to Vodafone. The move will decrease Vodafone’s tax bill to around $5 billion.
The deal will be the third biggest acquisition in corporate history. This will also mark the exit of British telecom giant Vodafone from the US market. Vodafone is one of the largest dividend payers in the UK and investors are speculating the likely windfall from the proposed deal. Investors are expected to be given the option of getting Verizon shares or cash or a combination of both. Both Verizon and Vodafone declined to comment on the matter.