Verizon and Vodafone agree on $130B buyout

Verizon and Vodafone agree on $130B buyout
There have been rumblings for a few days now that Verizon and Vodafone have been getting closer to a deal which would have Verizon buying out Vodafone's 45% stake in Verizon Wireless. As of yesterday, we knew that today would hold a vote on the matter; and, The Wall Street Journal is now reporting that the deal has been agreed to by negotiators for both sides.

The actual votes from the boards of each company have not happened yet, but those votes are expected to be little more than a formality at this point. Rather than meeting in the middle, it sounds like Verizon gave in to Vodafone's demands, and will end up paying $130 billion to buyout Vodafone. The talks had originally stalled because Verizon was trying to negotiate the price down closer to $100 billion. 

As was said in our report yesterday, the deal is expected to be agreed to by the boards of each company, and the official announcement of the deal should come tomorrow. 

source: WSJ

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13 Comments

1. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Windfall for Vodafone, but maybe they should declare a liquidating dividend and go out of business? Vodafone's other ops aren't exactly financially compelling.

2. milesboy5

Posts: 179; Member since: Nov 07, 2012

I mean they now have 130B dollars to invest in their other ops.

9. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

What makes you think they will be any better at investing their pile of cash than they were at operating their non-VZW units?

3. tedkord

Posts: 17074; Member since: Jun 17, 2009

So Verizon is worth over $260 billion?

4. ardent1

Posts: 2000; Member since: Apr 16, 2011

You need to do the math: 45% of the WIRELESS business for say $130 billion. 130 billion / 0.45 = about $288.9 billion. The actual value of the entire wireless business is more since minority shareholders get less than full value. Or said differently, had Vodafone tried to buy the Verion Wireless' 55% majority ownership, the entire value would exceed the $290 billion bogey. We know this to be true (e.g. minority shareholders get a discount to fair value) because the average premium is about 30% paid to minority shareholders during corporate takeovers on publicly traded stocks. That is to say, had the minority shares been correctly priced, the 30% premium shouldn't occur. Logic dictates because of the acquistion premium, the existing price prior to the acquistion must reflect the minority discount. The catch is the acquisition price my be less than fair value. Short answer -- the Wireless business is worth say $290 billion since Verizon is acquiring the minority shareholder, BUT SINCE Verizon has other assets (it has landlines, etc), then Verizon is worth way more than $290 billion.

7. tedkord

Posts: 17074; Member since: Jun 17, 2009

I did the math. That's how I arrived at over $260 billion.

8. ardent1

Posts: 2000; Member since: Apr 16, 2011

If $130B / 0.45 equals over $260B is the best you can do, then you need to work on your math skills. This isn't differential calculus, it's basic long division.

13. scumbledEGG unregistered

he said its OVER 260b, haha! he's right!!! he didn't say exactly 288.9b... rounding 260 is 300??? rounding 288.9 is 300??? "estimated math" = "common sense" haha! "DON'T GIVE ADVICE UNLESS YOU'RE ASKED"

12. Leo_MC

Posts: 6293; Member since: Dec 02, 2011

Usually the shareholders get more than their shares value. At this rate, VW will get back WC money in 60-70 years.

5. zachattack

Posts: 621; Member since: Jul 31, 2013

1. wtf is Vodafone and 2. holy s**t that's a lot of F****** money

6. Blazers

Posts: 708; Member since: Dec 05, 2011

I could be wrong, but I believe Vodafone is an old wooden ship that was used during the civil war era......

10. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Might as well be an old wooden ship for all they accomplished separate from VZW.

11. Troysyx

Posts: 181; Member since: Jul 30, 2012

In spanish, it means "whales vagina"...

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