2013 Deals of the Year: Verizon Clears the Air With Vodafone Purchase

In 2000, when Vodafone Group paid $173 billion for German telecom Mannesmann in what remains the biggest-ever M&A transaction, Christian Lesueur was a young analyst on the merger. When Verizon Communications recently purchased Vodafone’s 45 percent stake in Verizon Wireless for $130 billion, Lesueur, now head of telecom, media and technology for Europe, the Middle East and Africa at UBS, served as a key adviser to Vodafone CEO Vittorio Colao.

历史的third-largest deal got its start in 1999, when Vodafone outbid what was then Bell Atlantic to buy AirTouch Communications, then the biggest U.S. independent wireless provider, for $62 billion. But the two companies soon created Verizon Wireless: Newbury, England–based Vodafone contributed AirTouch’s assets, which covered California and the western U.S., while Bell Atlantic, which was then combining with GTE Corp., had a footprint in New York and much of the East Coast.

Vodafone regarded the joint venture as a transitional move before a merger with Verizon, but the 2000 market crash killed that plan. Between 2000 and 2013 the business became the No. 1 wireless provider in the U.S. and the fastest-growing part of Verizon. The New York–based company had wanted to buy out Vodafone’s stake since at least the middle of last decade, but the two parties could never agree on a price.

2013 Deals of the Year Jim Renwick & Team Barclays Antonio Weiss & Team Lazard Christian Lesueur & Team UBS James ("Jimmy") Lee Jr. & Team JPMorgan Chase & Co. Marco Gonçalves & Team BTG Pactual Marisa Drew & Team Credit Suisse Group Geoffrey Austin & Team Moelis & Co. 安东尼·诺托&团队 Goldman Sachs Group Adam Taetle & Team Barclays Kenneth Hirsch & Team Goldman Sachs Group

Two factors overcame that obstacle in September, when the deal was announced. Changes at the top improved the chemistry between the two sides. In 2011, Lowell McAdam had replaced Ivan Seidenberg as Verizon’s CEO. McAdam had a strong working relationship with Colao, having worked for AirTouch in the 1990s developing new businesses in places like Italy, where Colao ran the Vodafone division. (The two share a passion for cycling and once rode in a 30-mile race together.) A rapidly closing financing window, due to fears of rising interest rates that would make it more expensive to issue debt, also concentrated minds. Volatile stock markets and new wireless competitors that could affect the joint venture’s value added to the urgency. The result was a generous price: Verizon paid about $40 billion more than some estimates suggested the company had intended.

严重的谈判始于2013年,Verizon的第一fering upward of $95 billion. Lesueur advised Vodafone to stay firm on price and pursue a deal that would be a win for both companies. Verizon financed the transaction in part with a record $49 billion bond offering, shattering a mark held briefly by Apple after its $17 billion deal five months earlier.

London-based Lesueur, 38, is the main relationship banker for Vodafone with Jonathan Rowley, UBS’s co-head of M&A for EMEA; former co-head of investment banking Simon Warshaw, who has since departed, also played a central role in the deal. A 17-year veteran of UBS, Lesueur has worked with Colao and his predecessors Arun Sarin and Christopher Gent on 30 transactions since 2000, worth a combined $400 billion. UBS and Goldman Sachs Group earned a total of between $40 million and $50 million for advising Vodafone.

Through the acquisition, which is due to close in the first quarter of 2014, Verizon will be able to better compete with U.S. rival AT&T. Vodafone gets to reward investors for their patience — it’s returning $84 billion to shareholders — and can use its healthy balance sheet to go up against more highly leveraged European competitors. To that end it has announced a $12 billion investment program that includes upgrading its operations and network.

Rank	Deal	Estimated Fees ($ Millions) *
1	U.K. bankBarclaysfollows a £5.8 billion ($9.1 billion) rights issue with a $2 billion hybrid bond offering.	$1832
2	Warren Buffett’sBerkshire Hathawayand Brazilian investment firm3G Capitalpay $27.4 billion to take ketchup makerH.J. Heinz Co.private.	$97–107
3	U.S. telecomVerizon Communicationsagrees to give Vodafone $130 billion for the British carrier’s 45 percent stake inVerizon Wireless.	$93–103
4	FounderMichael DellandSilver Lake Partnersprivatize U.S. computer makerDellfor $24.9 billion.1	$82–92
5	Brazilian phone companyOiandPortugal Telecomagree to a $15.7 billion tie-up under the former’s name.	$70–90
6	Cable giantLiberty Globalbuys the U.K.’sVirgin Mediafor $25.5 billion.	$882
7	Advertising firmsOmnicom GroupandPublicis Groupeagree to a $35 billion Franco-American merger of equals.	$50–70
8	Social media companyTwitterlaunches a $2.1 billion initial public offering on the New York Stock Exchange.	$682
9	China’sShuanghui International Holdingscloses a $7 billion buyout of U.S. pork producerSmithfield Foods.	$51–61
10	iPhone makerAppleissues $17 billion worth of bonds.	$532
* Estimates unless otherwise noted. M&A totals only include advisory fees; debt and equity totals only include underwriting fees. 1 Deal value provided by Dell. 2 Publicly disclosed.
Source: Thomson Reuters/Freeman Consulting Services.