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Verizon agrees terms for Tracfone purchase
Posted on Monday, 14 September 2020 15:03
Verizon Communications has signed on the dotted line to acquire Tracfone, a US-based pre-paid and value mobile provider.
Under the terms of the deal, the buyer will pay USD 3.13 billion in cash and the same amount in stock.
There will also be a USD 650.00 million earn-out component, subject to certain undisclosed performance-related targets being achieved, thereby giving the deal a total value of USD 6.90 billion.
Completion is expected to take place in the second half of 2021, once the green light has been received from the relevant regulatory bodies and other customary conditions have been satisfied.
Verizon believes the acquisition will have a positive financial impact on the firm in the first full year following closing, while it also expects to benefit from network synergies as a consequence.
The company will gain access to a larger customer base through the purchase and will also be able to enhance its offering to existing clients, while gaining a platform for further growth.
Commenting on the buyout, Ronan Dunne, chief executive of Verizon Consumer Group, stated: “This transaction firmly establishes Verizon, through the Tracfone brands, as the provider of choice in the value segment, which complements our clear leadership in the premium segment.”
Tracfone is the largest reseller of wireless services in the US, according to the acquiror’s press release, and serves around 21.00 million subscribers through its 90,000-strong network of retail locations.
The parties have already partnered together in the past, with the target’s subscribers utilising Verizon’s wireless network as a result of an existing wholesale agreement.
According to Zephyr, the M&A database published by Bureau van Dijk, this is the second time Verizon has taken to the acquisition trail in 2020.
It May, it completed the purchase of cloud-based video conferencing platform operator Blue Jeans Network for USD 400.00 million, having previously announced the takeover in April of this year.
© Zephus Ltd