Verizon Communications (NYSE:VZ) and Vodafone have reached an agreement in which Verizon will pay Vodafone $130 billion for its 45 percent stake in Verizon Wireless, according to a Wall Street Journal story citing unnamed sources familiar with the matter.
The deal must still be approved by both companies' boards. If approved, the deal could be announced as soon as tomorrow. Both boards are meeting Sunday to discuss the matter.
Last week Vodafone confirmed that it was in discussions with Verizon, and Bloomberg reported that the transaction was worth around $130 billion. According to Bloomberg, Verizon was working with several banks to raise $10 billion from each, or enough money to pay for around $60 billion of the deal.
Rumors have circulated for years that Vodafone was looking to exit the venture, but the speculation grew more heated in April after reports that the two were negotiating a deal. The companies' talks reportedly broke down over a disagreement on the price Verizon would pay: Vodafone wanted $130 billion and Verizon was only willing to pay $100 billion, the reports said. Verizon executives have consistently said the company would be interested in acquiring Vodafone's stake, without saying much beyond that.
Verizon Wireless recently paid a $7 billion dividend to the parent companies. In the second quarter, Verizon Wireless' total wireless revenue clocked in at $20 billion, up 7.5 percent year-over-year. Wireless service revenues grew to $17.1 billion, up 8.3 percent from the year-ago period. The operator has consistently been one of the strongest items on Vodafone's balance sheet, which has been weighed down by units in Europe that have taken hits because of the continent's ongoing economic turmoil.
A deal with Verizon would bolster Vodafone's balance sheet and allow it to focus on rebuilding its European operations. Vodafone has written down more than $37 billion from its European business in the past five years, according to the Journal.
- See this WSJ article (sub. req.)
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