UPDATE 4-Verizon poised for historic $130 billion Vodafone deal
* Advanced talks to buy Vodafone's 45 pct of Verizon Wireless
* Ends decade-long stand-off between Verizon and Vodafone
* Would be third-largest deal of all time
* Deal to be 50 percent cash, 50 percent shares -sources
* Vodafone shares up as some see possibility of takeover
By Kate Holton
LONDON, Sept 2 (Reuters) - Verizon Communications was poised on Monday to finally take full control of its U.S. wireless business with a $130 billion deal to buy out Vodafone and end a decade-long corporate stand-off.
The British firm said late on Sunday it was in advanced talks with Verizon to sell its 45 percent stake in the Verizon Wireless joint venture for cash and common shares in what would be the world's third-largest deal of all time.
"A deal now is very likely," one of Vodafone's 10 largest shareholders told Reuters. "In terms of where the management teams are, they are both keen to do a deal." Another top 10 investor said the Vodafone management team should be greeted as heroes if they pull off the deal.
The news sent shares in Vodafone up 4 percent in early trading, taking the total rise since the news broke of a deal late last week to 13 percent, boosted by hopes of a big payout to shareholders, a belief that the remaining assets are undervalued, and the possibility that the company could be open to a takeover.
The move to sell out of the joint venture closes a heady expansionist chapter for Vodafone, one of Britain's best-known companies, which grew rapidly over the last 20 years through a spate of aggressive deals, taking its brand into more than 30 countries across Europe, Africa and India.
The world's largest deal, a $203 billion hostile takeover of Germany's Mannesmann in 2000, made the 31-year-old Vodafone the company it is today.
The deal is likely to be the defining event in the careers of Vittorio Colao and Lowell McAdam, the congenial chief executives of Vodafone and Verizon, who rebuilt relations between the two sides to such an extent that they are now close to completing the deal that for long eluded their predecessors.
People familiar with the situation said they expected a full announcement after the London stock market closes on Monday, and after the board of Verizon votes on the proposed transaction for the biggest mobile operator in the United States.
The Vodafone board has already voted in principle to back the deal, one person familiar with the situation said.
The new Vodafone will be smaller, less profitable and more reliant on its core, mature European assets but it is expected to use the windfall to rebuild via smaller acquisitions and higher network investments.
Its decision to finally exit the U.S., which boasts higher margins and prices than Europe, may also indicate that Vodafone believes the market is about to get more competitive.
Under the terms of the proposed agreement, Vodafone would get $60 billion in cash, $60 billion in Verizon stock, and an additional $10 billion from smaller transactions that will take the total deal value to $130 billion, two of the people familiar with the matter have told Reuters.
To fund the cash portion of the deal, Verizon was lining up as much as $65 billion in financing from four banks: JPMorgan Chase & Co, Morgan Stanley, Barclays Plc and Bank of America Merrill Lynch, they said.
The final size of the bridge-loan facility has now been set at $61 billion, two of the people said. The banks have committed to the financing, which is expected to be split evenly among the four, two people said.
Assuming a $130 billion price tag, total advisory fees for banks involved would be in the $200 million to $250 million range, according to Freeman estimates.
The news that a final agreement is near follows years of speculation as to when and whether Vodafone, the world's second largest mobile operator, would exit the highly successful business.
Vodafone entered the United States in 1999 through a series of deals that resulted in the formation of Verizon Wireless in 2000, with Verizon Communications holding 55 percent of the company and Vodafone the rest.
But the two sides clashed almost immediately, and the partnership has over the years been fraught with difficulties, with both partners at times seeking to buy out the other.
Verizon at one point withheld dividends from Vodafone for six years in a bid to force the British group out. Those efforts were resisted by Arun Sarin, who led the company from 2003 to 2008, and then by Colao.
Their resistance, often in the face of investor demands for a sale, may prove to have been a masterstroke as Verizon Wireless built itself into the largest operator in the U.S.
Since it resumed paying dividends, Vodafone has received 7.4 billion pounds ($11.5 billion) from the U.S. business, helping it to return 23 billion pounds in total to shareholders in the last three years and making it a must-have stock for funds and pension groups around the world.
The cash coming out of the U.S. business also helped the British group mask the pressures it was under in Europe, where its assets have been hit by recession and regulation. Full-year results to March 2013 showed that more than half of the group's adjusted operating profit came from Verizon Wireless.
For Verizon, it is unfettered access to that cash that makes the deal worth $130 billion. Even after the bump in price, the deal is expected to be accretive to Verizon's earnings, one of the sources said.
Talks between the two sides picked up in earnest a few weeks ago, as Verizon grew concerned that its window of opportunity was closing, with interest rates due to rise and its own stock price declining. That prompted Verizon to raise the offer price from the $100 billion it had initially floated to around $130 billion, sources have said.
For Colao, the timing was also fortuitous as Europe shows tentative signs of recovering and the U.S. shows signs that it could be in for increasing competition after Japan's SoftBank Corp took control of Sprint Nextel Corp, the No. 3 U.S. wireless provider.
"Some of Vodafone's investor base are a little nervous that the U.S. has got as good as it's going to get," the first shareholder said. "(It's) a good time for Vodafone to sell."
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