The Evolution of Verizon’s Higher Bid for Its Wireless Unit

It was never a secret that Verizon Communications wanted to buy back Vodafone‘s 45 percent stake in their enormous wireless joint venture. But just how badly Verizon wanted full ownership was disclosed in its preliminary proxy statement filed with the Securities and Exchange Commission.

The initial offer for the 45 percent stake was $95 billion. It eventually paid Vodafone $130 billion. The apparent ease with which Verizon raised its offer by a whopping 37 percent over the span of eight months highlights the strategic importance it ascribed to having full control of Verizon Wireless, the nation’s biggest cellphone operator with 100 million customers. It is also a striking reminder of just how big of a deal this was. Though Verizon had long considered buying back Vodafone’s 45 percent stake, the transaction started to gain momentum in June 2011, when Lowell C. McAdam, Verizon’s chief executive, who was chief operating office at the time, made a presentation to the company’s board suggesting that the deal go ahead.

In January 2013, McAdam traveled to London to meet Vodafone’s chief executive, Vittorio Colao. At that meeting, McAdam made an initial offer of $95 billion for the company’s stake. Colao wasted no time in saying that offer was inadequate, and also suggested a full-blown merger between the companies might be an option. By June, the Verizon board had let go of the idea of a full merger and authorized executives to go ahead with a bid for the stake totaling $120 billion.

Just more than a week later, Vodafone countered: It wanted $135 billion after taxes, plus cash adjustments. The total amount would be closer to $140 billion. On July 9, the two sides were still $20 billion apart on price.