Verizon is about to seal the US stake deal with Vodafone for a cool $130 billion. It is close to becoming a major stakeholder in the company for the said amount.
Verizon’s eyes are set on Vodafone. Therefore, it is generating funds amounting to about $10 billion from a number of banks. The short term goal is to raise $60 billion. The two companies have begun negotiations over price. Back in April, Verizon had tried to raise a $100 billion bid. Then the experts prognosticated that $100 billion was too low.
According to WSJ, Vodafone required at least $120 billion. Several factors ranging from changes in economic conditions to fluctuations in interest rates made the two companies decide upon such a venture. Vodafone actually wants to sell its 45% stake in Verizon Wireless to Verizon Communications Incorporated. Currently, though there is no guarantee that such a transaction will occur.
The talks are going on though and it is often through rational discussion that an agreement is often reached. If this deal goes through it would be the largest since Vodafone’s acquisition of Mannesmann AG at the end of the millennium.
Both Verizon and Vodafone have tried to solve their problems and many times they have come close to a merger. This time around that wish just might become a reality. Verizon’s stock reached an all-time high recently thereby giving it leverage. Meanwhile, Vodafone saw profits plummet and so it would be doing itself a favor by merging with Verizon.