Tuesday, September 3, 2013

Verizon and Vodafone Planning $130 bn Wireless Deal

Verizon Communications agreed on Monday to pay $130 billion for the 45 per cent stake in Verizon Wireless owned by British cellphone carrier Vodafone.

Reuters reports: The deal in cash and stock will give Verizon full access to the profits from the United States' largest mobile operator, handing it fresh firepower to invest in its mobile network and fend off challengers in a tough market that is fast becoming even more competitive.

For the British group, the accord will allow it to return 71 per cent of the net proceeds - or $84 billion including all of the stock - to shareholders while also ramping up investment in its networks to set itself apart from rivals.

Under the terms, Vodafone will get $58.9 billion in cash, $60.2 billion in Verizon stock, and an additional $11 billion from smaller transactions in a deal that is due to close in the first quarter of next year.

The deal will become the third largest announced deal in the world after Vodafone's $203 billion takeover of Germany's Mannesmann in 1999 and AOL's $181 billion acquisition of Time Warner the following year. Verizon has also managed to raise one of the largest ever financing packages at $60 billion.

The deal, in which Verizon will buy Vodafone's 45 per cent stake in Verizon Wireless, is the defining event in the careers of Vittorio Colao and Lowell McAdam, the chief executives of Vodafone and Verizon, respectively. They had succeeded in rebuilding relations between the two sides, long strained by clashes about the Wireless dividend and who would eventually seize full ownership.

McAdam told Reuters in an interview that the two men had initially discussed the possibility of combining Verizon and Vodafone before deciding that the stake sale made more sense for both companies.

He said the companies realised they were close to a deal after they spent the morning together in a hotel in San Francisco, chatting while on the exercise bike in the gym and later over breakfast.

The code name assigned to the deal was Project River. "We were Hudson and they were the Thames," he said, referring to rivers in New York and London.

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- Unknown Updated at: Tuesday, September 03, 2013

UPDATE : Microsoft Buys Nokia for 7.2bn bid

Finland's Nokia, once the undisputed leader in mobile phones, has been struggling to respond to the challenge from smartphone makers such as Apple (AAPL.O) and Samsung (005930.KS).

Analysts say Elop's bold bet in 2011 to adopt Microsoft's untested Windows Phone software has yet to pay off.

The deal is expected to close in the first quarter of 2014 and is subject to approval by Nokia's shareholders and regulatory approvals. Nokia partnered in 2011 with Microsoft and uses Microsoft's Windows software to run its mobile phones.

"It's a bold step into the future - a win-win for employees, shareholders and consumers of both companies," Microsoft's outgoing CEO, Steve Ballmer, said in a statement.

"Bringing these great teams together will accelerate Microsoft's share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services."

Nokia said in a statement it expected that Elop, along with senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber, would transfer to Microsoft when the deal was concluded. It did not say what roles they would take at Microsoft.

Nokia board chairman Risto Siilasmaa would take over CEO duties while the Finnish firm looked for a new CEO, it said.

Elop, a Canadian hired by Nokia in 2010 from Microsoft, has been one of the favourites to take over as Microsoft chief when Ballmer steps down.

(Reporting by Terhi Kinnunen; Writing by Alex Richardson; Editing by Mark Bendeich)

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