US telecoms giant Verizon has reached a deal with Vodafone to acquire its 45 per cent stake in Verizon Wireless for $US130 billion ($A146 billion).
The blockbuster deal – which would be one of the biggest transactions in corporate history – will allow Vodafone to bounce back from hefty losses, pay down debt, make new acquisitions and return money to shareholders, according to analysts.
It would also mark the British group’s exit from the US market and inject several billion euros into the British economy that is struggling to lift out of the doldrums.
The company’s share price jumped 3.59 per cent on Monday to close at 213.65 pence before the announcement the deal had been reached, while London’s FTSE 100 index rose 1.54 per cent overall.
Vodafone had earlier confirmed talks were advanced.
Vodafone said that it would return $US84 billion of the funds it receives back to shareholders and plough over $US9 billion into organic investments over the next three years to improve its networks and services.
Vodafone says shareholders will receive all Verizon shares “totalling $US84.0 billion, equivalent to 112p per share and representing 71 per cent of the net proceeds” from the transaction.
Vodafone Group Chairman Gerard Kleisterlee said the company’s investment in Verizon Wireless has created a great deal of value for shareholders and “Verizon’s offer now provides us with an opportunity to realise this value at an attractive price”.
The gigantic buyout will be the second-biggest merger and acquisition deal in global corporate history, according to data firm Dealogic. The world’s biggest M&A deal remains Vodafone’s purchase of Germany’s Mannesmann for $US172 billion including debt, in 1999.
The deal will be so big that some analysts say the effect on the British economy will be as great as the hundreds of billions of pounds injected into the British economy since 2009 by the Bank of England.