Just yesterday, we reported that Verizon and Vodafone had come to terms on Verizon buying out Vodafone's 45% stake in the company. On Monday, Verizon and Vodafone made it official and there's also a press release now, which you can read here.
Nearly 14 years ago, Vodafone invested in Verizon Wireless and purchased 45% of the company. Now the two, which are two of the largest carriers in the world, are breaking up. It's costing Verizon about $130 billion to break free of Vodafone. The settlement comes with about $58.9 billion in cash, $60.2 billion in Verizon stock and $11 billion in additional cash from smaller deals.
However the real question is why did Verizon want to break away from Vodafone all of a sudden? Well we've actually talked about this a few times already. But just in case some of you don't know. Verizon is looking to expand North, into Canada. There's been rumors flying around that they want to purchase WIND Mobile in Canada which is one of the smaller carriers up there. However, Verizon couldn't venture into the wireless industry outside of the US as long as Vodafone still had a 45% stake in the company. So now that Vodafone no longer has a stake in Verizon Wireless, Verizon can expand into Canada. Which could be seen as both good and bad for Canadians. But that's for another post.
Of course before this deal is final there are still some hurdles to jump through. Like the regulatory stuff that kept AT&T from swallowing up T-Mobile not too long ago. It shouldn't be a big deal since Verizon is just getting full ownership of Verizon Wireless which it had a controlling interest in the entire time. But the part that might slow this down is the $60.2 billion in Verizon stock that Vodafone will be acquiring. Vodafone is a foreign company after all. But the transaction is still slated to close early next year.
How many of you are surprised Vodafone is letting Verizon buy back the 45% stake in Verizon Wireless? Let us know in the comments below.