Week in Review: Verizon’s Vodafone Buyout

The week’s business news was widely dominated by Verizon’s buyout of Vodafone’s 45% stake in their joint venture, Verizon Wireless.  Why?  The short answer is:  “That’s what happens when news breaks of the largest such deal since the dot-com crash (circa 2000), the second-largest in the telecom industry, and the third-largest… ever.”

The slightly longer answer is that the deal is still, to some degree, clouded in a bit of mystery.  The New York Times today asked a few obvious questions:  Why $130 billion for 45% of an enterprise valued (in total) at $176 billion?  Why not earlier, like Verizon’s opportunities to make the move in 2001 and 2004?  And why did Verizon choose a joint venture in the first place?  The article describes a good deal of ‘inside baseball’–perhaps detailing the thought process of each company’s management team as they sought to lead the wireless charge in the United States.  This week’s post in The Economist, titled “A $130 billion divorce,” asked what Vodafone planned to do with the large payout?  And now, according to Bloomberg, Reuters, and other outlets, a Verizon shareholder class action suit is seeking to block one of history’s largest deals.  The plaintiffs are pointing to Verizon’s share performance since rumors of the deal surfaced:  down approximately 7.5%.

The Network will keep up-to-date as the deal moves forward.