Verizon Communications has agreed to buy Vodafone Group's 45 percent stake in Verizon Wireless.
According to Bloomberg, Verizon Communications now gets full control of Verizon Wireless in what is being called the biggest acquisition for a mobile-phone company in over a decade. Vodafone Chief Executive Officer, Vittorio Colao, said the deal puts his company in a good financial state as he attempts to help European businesses affected by the region's debt crisis in a conference call Bloomberg reported.
"The transaction will leave Vodafone in a strong financial situation," Colao said.
Verizon Chief Executive Officer Lowell McAdam told Bloomberg he feels the need for wireless devices and services still has lots of room to develop.
"Where could you go out and buy a business that has no integration risk, that has a great path in front of it for additional growth, that has 50 percent margins? This is really a unique asset," McAdam said.
As part of the transaction, Verizon will sell its 23 percent stake in Vodafone's unit over in Italy, back to the company for $3.5 billion The company's wireless asset will now use the $21.8 billion of operating income it takes in a year to fund investments on its mobile network Bloomberg reported.
Verizon will pay Vodafone $58.9 billion in cash which will be financed with credit from JP Morgan, Bank of America, Barclays and Morgan Stanley. $60.2 billion in stock will also be given to shareholders of Vodafone.
Colao also said the agreement is not an indication Vodafone is done with doing business with United States cell phone companies
"It is not a big retreat," he said. "We have just monetized a big value for our shareholders from our U.S. investment. It is not a retreat in any way."
In 1999, Vodafone bought U.S.-based AirTouch Communications for what was then the world's largest wireless company. Vodafone went on to create a national mobile network with Bell Atlantic which had just merged with GTE corp to form Verizon Communications.
Verizon had been seeking to complete the transaction since at least 2004.
