Britain’s Vodafone Group on Monday confirmed it is to sell its 45 per cent stake in joint venture Verizon Wireless to US company Verizon Communications for $ 130 billion.
The sum makes the deal, expected to be complete by early 2014, one of the largest in corporate history.
It includes $ 58.9 billion in cash and $ 60.2 billion in Verizon shares. Vodafone investors will get all the shares and $ 23.9 billion in cash, totalling $ 84 billion or 71 per cent of the net proceeds, Vodafone said.
The deal represented a “very substantial return to shareholders” and an “attractive valuation” of Vodafone’s stake as well as allowing the company to pay off debt, said chief executive Vittorio Colao.
Vodafone, the world’s second largest mobile phone operator in terms of customers and revenue, would use the rest of the profits to accelerate its investment in 4G coverage, he added.
The 4G network would cover 90 per cent of its main five European markets by 2017, Vodafone said. It will also deepen its 3G coverage and invest in fibre and broadband.
Vodafone shares went up by 3.4 per cent on Monday to 213.2p in anticipation of the deal, which was announced after the London stockmarket closed.
The telecommunications giant has been in the process in recent months of spinning off investments in companies it does not fully control, part of a plan to focus on its core European business.
Monday’s deal will also see Verizon provide Vodafone with $ 5 billion in loan notes and sell its 23 per-cent stake in Vodafone Italy to Vodafone for $ 3.5 billion, giving the British company full ownership.
Verizon Wireless is the largest and most profitable US wireless carrier, with more than 100 million customers. Verizon has been trying to buy Vodafone’s stake for years, but the two companies have long failed to agree on price.
Verizon chief executive Lowell McAdam said the deal was a “major milestone” for his company and that the timing had been right “to execute a transaction that benefits both companies and their shareholders.” His company is US number two, behind rival telecommunications company AT&T, though it has a slight lead in the important wireless market.
The deal will see Vodafone pay $ 5 billion of tax in the United States but nothing in Britain, since it says its US arm is owned by a Dutch holding company.