LONDON/NEW YORK — Verizon Communications is back at the table to finally buy out the rest of its stake in Verizon Wireless from UK mobile carrier Vodafone Group PLC in what could be the third-biggest merger-and-acquisitions deal of all time.
Verizon, the No. 1 U.S. mobile carrier, has made no secret of its desire to gain full ownership of a network that is growing fast and generating billions of dollars in free cash flow, but the companies have tussled over how to value such a deal.
Vodafone’s chief executive Vittorio Colao has bided his time, waiting for the optimal moment to sell the 45 percent stake in a deal that would leave the world’s second largest mobile operator with assets in Europe and emerging markets such as India, Turkey and Africa.
Verizon and Vodafone were discussing a sale for around $130 billion in talks that had resumed a few weeks ago, according to a person familiar with the situation, who asked not to be named. The person said Thursday that an announcement could come as soon as the first week of September. A second source said the announcement could come Sept. 2. Verizon is under pressure to find ways to expand. Despite the steep sums being discussed, Verizon investors expect handsome rewards from full Verizon Wireless ownership.
With 2012 free cash flow of $28.6 billion at Verizon Wireless, RBC Capital Markets analyst Doug Colandrea said Verizon has the ability to pay back debt raised to fund the deal “very rapidly.”