You can now read 10 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

The Boston Globe

Business

Verizon set to buy out Vodafone in wireless venture

$130b buyout would leave wireless operation under control of US company

NEW YORK — Verizon Communications neared a long-anticipated deal Sunday to buy the 45 percent stake in its wireless business held by Vodafone for about $130 billion, heralding a continued sweeping realignment of the global telecommunications landscape.

Though a deal may have little effect on Verizon Wireless’s nearly 100 million subscribers at first, it would ripple through the industry and Wall Street, with both having closely watched the back-and-forth of the negotiations for months.

Continue reading below

The companies were expected to announce the deal Monday, barring last-minute hiccups, said people briefed on the matter.

A sale would be the third-biggest takeover in corporate history and would give Vodafone a sudden windfall that might lead the British phone company to further acquisitions of its own. It would also furnish the banks working for both sides with a bonanza of fees.

Verizon is expected to pay both cash and stock. Vodafone’s board was scheduled to meet Sunday to vote on the deal, with Verizon’s directors meeting sometime afterward.

Vodafone confirmed Sunday afternoon that it was in “advanced discussions” with Verizon over the sale of its stake in Verizon Wireless, but declined to provide detail. Verizon declined to comment.

Verizon would gain full control of perhaps its most important business and a vital beachhead in the growing fight over mobile broadband connections. Verizon Wireless is America’s biggest cellphone service operator, claiming 98.9 million subscribers to AT&T’s 77.9 million.

Continue reading below

The work of connecting smartphones, tablets, and other devices yields big bucks. Last year, Verizon Wireless reported $21.8 billion in operating income and $75.9 billion in operating revenue.

For Verizon, an acquisition would realize a dream of unwinding a 14-year partnership. Verizon Wireless was born of the combination of Vodafone’s nascent US cellphone operations with those of Bell Atlantic, a Verizon predecessor, in 1999.

Since then, Verizon Wireless has grown tremendously, spearheading a long stretch of consolidation in the telecommunications industry alongside AT&T, refocusing the US market around the two biggest survivors of the breakup of Ma Bell nearly 30 years ago.

Both sides in the joint venture have held discussions for years about unwinding it. Those talks frequently fell apart over issues like price and the potentially big tax hit that Vodafone would take. In recent months, Verizon and Vodafone rekindled their negotiations, having come to terms over sticking points while moving ahead of the specter of rising interest rates. A sale now is not expected to generate a big tax bill for the British company, for example.

Buying out Vodafone’s stake would involve breathtaking amounts of financing, including over $60 billion worth of bonds and loans arranged by an army of banks. Verizon’s chief executive, Lowell C. McAdam, has said his company can afford a big deal.

Helping to arrange the debt package are JPMorgan Chase, Bank of America Merrill Lynch, Morgan Stanley, and Barclays, people briefed on the matter said. Verizon’s advisers also include Guggenheim Partners and Paul J. Taubman, a former Morgan Stanley president, while Vodafone has been working with UBS and Goldman Sachs.

The deal would give Vodafone two of the biggest deals on record: its $202.8 billion takeover of the German cellphone operator Mannesmann in 2000 and the $181.6 billion merger of AOL and Time Warner in 2001 are the top two corporate deals, according to Thomson Reuters.

For Vodafone, the sale would provide a much-needed injection of cash to help rejuvenate its European business. Despite holding a strong presence in many European markets, it has faced sagging sales and increased competition.

You have reached the limit of 10 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week