Corporate Finance: Verizon Vodafone case study

Corporate Finance: Verizon Vodafone case study Essay example
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Finance & Accounting
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Corporate Finance: Verizon Vodafone case study Introduction Verizon Wireless is the joint venture between Verizon Communications and Vodafone. Verizon Communications holds 55% shares in the venture. Although both Vodafone and Verizon had been trying to increase their shareholding in the Verizon Wireless, either of them was not willing to surrender their shares…

Introduction

The Verizon Communication plans to finance this business deal with the help of bonds and debt financing. The bankers of Verizon Communications have already agreed the company to provide $60 billion in debt financing to complete this plan successfully. This paper will analyse different aspects of the Verizon’s plan to buy out Vodafone’s 45% stakes (in the Verizon Wireless) for a sum of $130 billion. History of the joint venture The merger between Bell Atlantic Mobile and GTE Wireless on 3rd April 2000 resulted in the formation of Verizon Communications. One year earlier, UK based Vodafone AirTouch Plc had declared a joint strategic alliance with Bell Atlantic with intent to form a wireless service provider. This strategic business proposal received approval from governmental authorities within six months and commenced operations as Verizon Wireless on 4th April 2000. Verizon Communications owns 55% shares through its subsidiaries (Bell Atlantic Mobile 24.2% and GTE Wireless 30.8%) whereas the Vodafone Group holds 45% shares through its subsidiaries (PCS Nucleus, L.P 6.2% and JV PartnerCo, LLC 38.8%) (p.603) (DePamphilis, 2008). ...
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