Vodafones Sale Of Ownership Of Joint Venture To Verizon Essay

Vodafones Sale Of Ownership Of Joint Venture To Verizon - Essay Example is a United States (US) based company that is headquartered at New York and provides innovative technology and communication solutions, which enhances the way the customers play, work and live. On September 2013, Verizon Communications has agreed to pay Vodafone Group $130 billion in order to buy the US wireless business. This has been the third largest corporate deal in history. This paper focuses on the deal, highlighting on the history of the joint venture, rationale of the two companies behind the deal, reaction in the stock market, tax consequences and plans of Vodafone with this cash generation. Brief History of the Joint venture between Vodafone and Verizon In June 1994, the regional phone company of United States, Bell Atlantic, had formed a partnership in the wireless division with their immediate neighbour, NYNEX, covering almost 55 million customers who were regarded as potential for the organization (Thomson Reuters, 2013). This deal marked the beginning of the organization, Verizon Wireless. In 1996, NYNEX and Bell Atlantic agreed to enter into an outright merger. Then again in the year 1998, GTE and Bell Atlantic agreed to merge together. ... In June 2000, the merger of GTE and Bell Atlantic was closed and Verizon Communication was created. At this time, the wireless operation of GTE was included in Verizon Wireless. In this joint venture, Verizon Communications was the majority owner with a stake of about 55 percent (Thomson Reuters, 2013). In the year 2004, Vodafone lost the bidding for AT&T Wireless, which might have forced to sell the stake of Verizon Wireless. Arun Sarin, the CEO of Vodafone had said that Vodafone would discuss with Verizon regarding the future of their partnership. He insisted that both the companies would have bigger stake in the joint venture. In the year 2012, Verizon Wireless provided its parent with a dividend of $10 billion and $8.5 billion in December and January, respectively. At the beginning of 2013, Verizon was considering the purchase of their stake in Verizon Wireless (Thomson Reuters, 2013). In March, new sources claimed that Verizon was intending to resolve their relationship with Vod afone. In April 2013, Verizon expressed their desire to buy back the 45 percent of Vodafone’s stake in Verizon Wireless and put an end to all speculations regarding the merger of Vodafone and Verizon. On this context, Gerard Kleisterlee, the chairman of Vodafone, had stated that the company will consider the offer seriously, provided it offers more value to the investors. Rationale of Verizon behind Buying and Vodafone behind selling On September 2013, Verizon Communications Inc. had announced their agreement with Vodafone group Plc. for acquiring 45 percent stakes of Vodafone in Verizon Wireless for $ 130 billion, comprising of stock and cash. Verizon expect that after closing the