8-KRegulation FDOther EventsExhibits & Filings

VERIZON COMMUNICATIONS INC 8-K Report, Regulation FD Disclosure (Sep 14, 2020)

Filed September 14, 2020For Securities:VZ

Summary

Verizon Communications Inc. (VZ) announced a significant strategic acquisition on September 13, 2020, entering into a stock purchase agreement to acquire TracFone Wireless, Inc. This move aims to bolster Verizon's position in the U.S. prepaid wireless market by integrating TracFone's substantial customer base, which operates various brands including TracFone, SafeLink Wireless, and Straight Talk. The acquisition is structured as a combination of cash and Verizon common stock, signaling confidence in Verizon's own valuation while providing América Móvil with an equity stake. The total consideration for TracFone is valued at approximately $6.335 billion, comprising $3.125 billion in cash and $3.125 billion in Verizon common stock, with potential for an additional $650 million in future cash payments contingent on performance. This transaction is subject to standard regulatory approvals and closing conditions, and is expected to be a key driver in expanding Verizon's reach across different customer segments. Investors should monitor the regulatory review process and the eventual integration of TracFone's operations to assess the long-term value creation of this acquisition.

Key Highlights

  • 1Verizon to acquire TracFone Wireless, Inc. for approximately $6.335 billion (cash and stock).
  • 2Transaction includes $3.125 billion in cash and $3.125 billion in Verizon common stock, subject to adjustments.
  • 3Potential for up to $650 million in additional future cash consideration tied to performance measures.
  • 4Acquisition aims to strengthen Verizon's presence in the U.S. prepaid wireless market.
  • 5TracFone operates popular brands such as TracFone, SafeLink Wireless, and Straight Talk.
  • 6The deal is subject to customary regulatory approvals and closing conditions.
  • 7Stock issuance to América Móvil will be based on a 10% collar mechanism around Verizon's average trading price at closing.

Frequently Asked Questions

The primary goal of acquiring TracFone Wireless is to significantly expand Verizon's customer base and market share within the U.S. prepaid wireless segment. This move is expected to enhance Verizon's reach to a broader range of consumers, particularly those in the value-conscious segment.

Verizon is financing the acquisition through a combination of cash and its own common stock. The deal involves $3.125 billion in cash and $3.125 billion in Verizon common stock, with potential for additional cash payments based on TracFone's future performance.

The transaction is subject to customary closing conditions, which include obtaining necessary regulatory approvals from relevant authorities. Investors should pay attention to the regulatory review process as it can impact the timeline and ultimate completion of the acquisition.

The seller of TracFone Wireless is América Móvil, S.A.B. de C.V., a major telecommunications company based in Mexico. América Móvil will receive a portion of the payment in Verizon common stock, making them a shareholder in Verizon.