NEW YORK, Sept. 2, 2013 /PRNewswire/ -- Verizon
Communications Inc. (NYSE, Nasdaq: VZ) today announced that it has
entered into a definitive agreement with Vodafone Group Plc
(London, Nasdaq: VOD) to acquire
Vodafone's U.S. group with the principal asset of 45 percent of
Verizon Wireless for $130 billion,
consisting primarily of cash and stock. Verizon expects the
transaction at close to be immediately accretive to the company's
EPS (earnings per share) by approximately 10 percent, without any
one-time adjustments.
The transaction was unanimously approved by the boards of
directors of Verizon and Vodafone, and is subject to customary
closing conditions, including regulatory approvals and the approval
of both companies' shareholders. The transaction is expected to
close in the first quarter of 2014.
The transaction would provide Verizon with 100 percent ownership
of the industry-leading wireless carrier in the United States. As a wholly owned entity,
Verizon Wireless will be better equipped to take advantage of the
changing competitive dynamics in the market and capitalize on the
continuing evolution of consumer demand for wireless, video and
broadband services.
Lowell McAdam, Verizon chairman
and CEO, said: "Over the past 13 years, Verizon Wireless has been a
key driver of our business strategy, and through our partnership
with Vodafone, we have made Verizon Wireless into the premier
wireless provider in the U.S. The capabilities to wirelessly stream
video and broadband in 4G LTE complement our other assets in fiber,
global IP and cloud. These assets position us for the rapidly
increasing customer demand for video, machine to machine and big
data. We are confident of further growth in wireless, and our
business in its entirety."
McAdam continued: "This transaction will enhance value across
platforms and allow Verizon to operate more efficiently, so we can
continue to focus on producing more seamless and integrated
products and solutions for our customers. We believe full ownership
will provide increased opportunities in the enterprise and consumer
wireline markets."
McAdam concluded: "Verizon Wireless is the greatest wireless
company in the world, and a big part of this success was due to the
hard work of both partners, Vodafone and Verizon. The timing was
right to execute a transaction that benefits both companies and
their shareholders. Today's announcement is a major milestone for
Verizon, and we look forward to having full ownership of the
industry leader in network performance, profitability and cash
flow."
Vittorio Colao, Vodafone Group
CEO, said: "This transaction allows both Vodafone and Verizon to
execute on their long-term strategic objectives. Our two companies
have had a long and successful partnership and have grown Verizon
Wireless into a market leader with great momentum. We wish Lowell
and the Verizon team continuing success over the years ahead."
Quarterly Dividend Increase
Demonstrating the
importance of its dividend policy to deliver value for
shareholders, Verizon also announced today that its Board of
Directors has declared a quarterly dividend of 53 cents per outstanding share, an increase of
1.5 cents per share, or 2.9 percent,
from the previous quarter. On an annual basis, this increases
Verizon's dividend 6 cents per share,
from $2.06 to $2.12 per share.
Financing and Approvals
The transaction consideration
of $130 billion consists of a
combination of cash, Verizon common stock and other items.
Verizon will pay Vodafone $58.9
billion in cash. To fund this portion of the consideration,
Verizon has entered into a fully executed $61.0 billion Bridge Credit Agreement with J.P.
Morgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Bank
of America, N.A. and Barclays. Verizon intends to reduce the
commitments under the Bridge Credit Agreement with the issuance of
permanent financing. In addition, Verizon expects to maintain
capital structure, balance sheet and financial policies consistent
with investment-grade credit metrics, in part based on 100 percent
access to Verizon Wireless' cash flow.
Verizon will also issue common stock currently valued at
approximately $60.2 billion to be
distributed to Vodafone shareholders, subject to a collar
arrangement with a floor price of $47.00 and a cap price of $51.00 that will determine the maximum and
minimum number of shares to be issued upon closing of the
transaction. In addition, Verizon will issue $5.0 billion in notes payable to Vodafone, and
Verizon will sell its 23.1 percent minority stake in Vodafone
Omnitel N.V. to Vodafone for $3.5
billion. The remaining $2.5
billion of the transaction value will be a combination of
other consideration.
Guggenheim Securities, LLC, J.P. Morgan Securities LLC, Morgan
Stanley & Co. LLC and Paul J.
Taubman served as lead financial advisors to Verizon, and
J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC also
rendered fairness opinions in connection with the transaction.
Barclays and BofA Merrill Lynch served as financial advisors to
Verizon.Wachtell, Lipton, Rosen & Katz and Macfarlanes LLP are
serving as transaction counsel to Verizon, and Debevoise &
Plimpton LLP is advising Verizon on its debt financing.
Conference Call
Verizon executives will hold a
conference call for investors and analysts to discuss further
details of this transaction at 8 a.m.
Eastern time tomorrow, September
3. There will also be a live webcast of the call on
Verizon's Investor Relations website,
www.verizon.com/investor, where presentation materials will
be posted. Dial-in numbers are 888-455-3018 for domestic callers,
and 773-799-3816 for international callers; the passcode is
"VERIZON."
A replay of the webcast will be available within two hours after
the call. The webcast will be accessible on Verizon's Investor
Relations Web site, www.verizon.com/investor.
About Verizon Wireless
Founded in 2000 as a joint
venture of Verizon and Vodafone, Verizon Wireless reported
$75.9 billion in operating revenues
in 2012 and $39.5 billion in the
first half of 2013. Operating income margin was 28.7 percent in
2012 and 32.6 percent in the first half of 2013. EBITDA service
margin (non-GAAP) was 46.6 percent in 2012 and 50.1 percent in the
first half of 2013.
Verizon Wireless is the largest U.S. wireless company, with
100.1 million retail connections as of the end of the second
quarter of 2013. It operates the country's largest 4G LTE (advanced
wireless broadband) network, which, as of July 2013, was available to 301 million people in
500 markets across the U.S. As of the end of the second quarter of
2013, the company had 73,400 employees and operated more than 1,900
retail locations in the U.S.
Since 2000, Verizon Wireless has invested more than $80 billion in its network, and the company has
consistently led the industry in network reliability and customer
loyalty.
NOTE: See www.verizon.com/investor for reconciliations to
generally accepted accounting principles (GAAP) for non-GAAP
financial measures cited in this document.
About Verizon
Verizon Communications Inc. (NYSE,
Nasdaq: VZ), headquartered in New
York, is a global leader in delivering broadband and other
wireless and wireline communications services to consumer,
business, government and wholesale customers. Verizon Wireless
operates America's most reliable wireless network, with more than
100 million retail connections nationwide. Verizon also provides
converged communications, information and entertainment services
over America's most advanced fiber-optic network, and delivers
integrated business solutions to customers in more than 150
countries. A Dow 30 company with nearly $116
billion in 2012 revenues, Verizon employs a diverse
workforce of 180,900. For more information, visit
about.verizon.com.
Forward-Looking Statements
This communication
contains statements about expected future events that are
forward‑looking and subject to risks and uncertainties.
Forward-looking statements also include those preceded or followed
by the words "anticipates," "believes," "estimates," "hopes" or
similar expressions. For those statements, we claim the
protection of the safe harbor for forward‑looking statements
contained in the Private Securities Litigation Reform Act of
1995. The following important factors could affect
future results and could cause those results to differ materially
from those expressed in the forward-looking statements: failure to
obtain applicable regulatory or shareholder approvals in a timely
manner or otherwise; failure to satisfy other closing conditions to
the proposed transaction or events giving rise to termination the
transaction agreement; adverse conditions in the U.S. and
international economies; competition in our markets; material
changes in available technology or technology substitution;
disruption of our key suppliers' provisioning of products or
services; changes in the regulatory environments in which we
operate, including any increase in restrictions on our ability to
operate our networks; breaches of network or information technology
security, natural disasters, terrorist attacks or significant
litigation and any resulting financial impact not covered by
insurance; significantly increased levels of indebtedness as a
result of the proposed transaction; an adverse change in the
ratings afforded our debt securities by nationally accredited
ratings organizations or adverse conditions in the credit markets
affecting the cost, including interest rates, and/or availability
of financing; changes in our accounting assumptions that regulatory
agencies, including the SEC, may require or that result from
changes in the accounting rules or their application, which could
affect earnings; material adverse changes in labor matters,
including labor negotiations, and any resulting financial and/or
operational impact; significant increases in benefit plan costs or
lower investment returns on plan assets; and the inability to
implement our business strategies. The foregoing list of factors is
not exhaustive and there can be no assurance that the proposed
transaction will in fact be consummated. You should carefully
consider the foregoing factors and the other risks and
uncertainties that affect the parties' businesses, including those
described in Verizon's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and other
documents filed from time to time with the Securities and Exchange
Commission (the "SEC") and those described in Vodafone's Annual
Reports, Reports of Foreign Private Issuer and other documents
filed from time to time with the SEC. Except as required
under applicable law, the parties do not assume any obligation to
update these forward-looking statements.
NO OFFER OR SOLICITATION
This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval nor shall
there be any offer or sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, or pursuant to an exemption
from the registration requirements thereof.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE
SEC
Verizon Communications Inc. will file with the SEC a
registration statement on Form S-4 containing a prospectus with
respect to the Verizon securities to be offered in the proposed
transaction (the "prospectus") and a proxy statement (the "proxy
statement") with respect to the special meeting of the Verizon
shareholders in connection with the proposed transaction.
VODAFONE SHAREHOLDERS ARE URGED TO READ CAREFULLY THE Prospectus
and VERIZON Shareholders are urged to read carefully the Proxy
Statement, each together with OTHER RELEVANT DOCUMENTS TO BE FILED
WITH THE SEC, IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION AND RELATED MATTERS. Investors and shareholders
will be able to obtain free copies of the prospectus, the proxy
statement and other documents filed with the SEC by the parties
through the website maintained by the SEC at www.sec.gov. In
addition, investors and shareholders will be able to obtain free
copies of the prospectus, the proxy statement and other documents
filed with the SEC by Verizon by contacting Verizon's Assistant
Corporate Secretary, Verizon Communications Inc., 140 West Street,
29th Floor, New York, New
York 10007. These materials are also available on
Verizon's website, at www.verizon.com/investor.
PARTICIPANTS IN THE SOLICITATION
Verizon, Vodafone
and their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the
shareholders of Verizon in respect of the proposed transactions
contemplated by proxy statement. Information regarding the persons
who are, under the rules of the SEC, participants in the
solicitation of the shareholders of Verizon in connection with the
proposed transactions, including a description of their direct or
indirect interests, by security holdings or otherwise, will be set
forth in the proxy statement when it is filed with the SEC.
Information regarding Verizon's directors and executive officers is
contained in Verizon's Annual Report on Form 10-K for the year
ended December 31, 2012 and its Proxy
Statement on Schedule 14A, dated March 18,
2013, which are filed with the SEC. Information
regarding Vodafone's directors and executive officers is contained
in Vodafone's Annual Report on Form 20-F for the year ended
December 31, 2012, which is filed
with the SEC.
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This communication is deemed an
advertisement for the purposes of the U.K. prospectus rules and is
not a prospectus or a prospectus equivalent document. Any decision
to subscribe for, purchase, otherwise acquire, sell or otherwise
dispose of any Verizon Communications Inc. shares must be made only
on the basis of the information contained in and incorporated by
reference into the prospectus expected to be published by Verizon
in connection with the proposed transaction. Copies of the
prospectus will be available from Verizon's registered offices and
on Verizon's website at www.Verizon.com/investor.
SOURCE Verizon Communications Inc.