Revealed -- The Talks That Lead to Vodafone's $130 Billion Deal with Verizon
A stock market filing from Verizon has revealed how close it came to a full merger with Vodafone just months before Vodafone agreed to its US$130 billion deal to sell its stake in their wireless joint venture.
The stock market filing outlined the last couple of years of talks between the two companies over what to do about their joint-venture, and how the deal was signed on the very last day of talks that Verizon was willing to consider.
At various times in 2011, Verizon and Vodafone held discussions regarding potential transactions, including a potential combination of the two companies.
On March 2, 2012, the Verizon Board of Directors held a meeting at which they again discussed Vodafone transaction options. During this meeting, various aspects of these options were addressed by Verizon's management and financial and legal advisors.
In January 2013, Verizon directors met their Vodafone counterparts in London, and offered US$95 billion for Vodafone's 45% stake in Verizon Wireless. Vodafone rejected the offer as "inadequate".
It was the that Vodafone's CEO, Vittorio Colao also suggested that Verizon consider a possible merger of Verizon and Vodafone.
On March 2nd, Verizon's CEO, Mr. McAdam again stated that Verizon was prepared to propose an acquisition of Vodafone's indirect 45% interest in Verizon Wireless for $95 billion. Mr. Colao indicated that Vodafone would not be receptive to selling the indirect 45% interest at this price.
On June 6th, Verizon's Board authorized its management to make a formal offer to Vodafone to acquire Vodafone's 45% stake in Verizon Wireless for US$120 billion.
Four days later, the offer was made to Vodafone at a meeting in Amsterdam.
On the 19th June, Vodafone said it wanted US$135 billion, after any taxes it might have to pay -- which realistically meant an offer of US$140 billion.
On July 17, 2013, Verizon sent a letter to Vodafone with a revised offer of $125.35 billion. Vodafone responded a week later asking for US$135 billion.
On July 31, 2013, Verizon proposed an all-in price of $130 billion as its "best and final" offer. Vodafone's Mr. Colao indicated that he would review the proposal with Vodafone's Board of Directors.
Further negotiations took place over some of the technical details.
During this time, Verizon was securing agreements to fund the buyout, and warned Vodafone that it would be necessary to secure a deal by the 2nd September, due to issues with the debt markets.
On the 29th August, Vodafone publicly confirmed that it was in talks to sell the stake to Verizon.
On the 1st Sept, Vodafone issued a statement that it was in talks to sell its stake for US$130 billion.
Over the next two days, talks between the two sides to iron out the remaining technical details took place.
On the 2nd September, right up against Verzion's deadline, the deal was signed.