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Verizon barters for $49bn bond sale record | Verizon barters for $49bn bond sale record |
(6 days later) | |
The largest ever corporate IOU was issued on Wednesday, when the American cable company Verizon Communications held a $49bn (£31bn) bond sale to fund its $130bn deal with Vodafone. | The largest ever corporate IOU was issued on Wednesday, when the American cable company Verizon Communications held a $49bn (£31bn) bond sale to fund its $130bn deal with Vodafone. |
The news came as Vodafone's takeover battle for German broadband and television company Kabel Deutschland reached a nail biting finish, with fears the deal could fall at the final hurdle by failing to secure enough support from shareholders. | The news came as Vodafone's takeover battle for German broadband and television company Kabel Deutschland reached a nail biting finish, with fears the deal could fall at the final hurdle by failing to secure enough support from shareholders. |
In the US, Verizon attracted over 3,000 orders from more than 800 investors in a debt raising exercise that is set to eclipse the next three biggest corporate bond deals in history, including Apple's record $17bn issue this year. | In the US, Verizon attracted over 3,000 orders from more than 800 investors in a debt raising exercise that is set to eclipse the next three biggest corporate bond deals in history, including Apple's record $17bn issue this year. |
Verizon is expected to raise between $45bn to $49bn, more in debt than the gross domestic product of Tunisia, Slovenia, Lebanon and some 100 other countries. Demand was so high from dollar investors that a planned roadshow with meetings scheduled in Paris, London, Frankfurt and Amsterdam to attract sterling and euro investors was cancelled. | Verizon is expected to raise between $45bn to $49bn, more in debt than the gross domestic product of Tunisia, Slovenia, Lebanon and some 100 other countries. Demand was so high from dollar investors that a planned roadshow with meetings scheduled in Paris, London, Frankfurt and Amsterdam to attract sterling and euro investors was cancelled. |
The money raised will help fund Verizon's $130bn offer for Vodafone's 45% stake in Verizon Wireless, a joint venture between the two groups that has grown to become America's largest mobile phone network. | The money raised will help fund Verizon's $130bn offer for Vodafone's 45% stake in Verizon Wireless, a joint venture between the two groups that has grown to become America's largest mobile phone network. |
Verizon's deal is bigger than the combined size of the next three largest corporate bond deals in history: the Apple trade and offerings from pharmaceutical groups Roche and Abbvie. | Verizon's deal is bigger than the combined size of the next three largest corporate bond deals in history: the Apple trade and offerings from pharmaceutical groups Roche and Abbvie. |
Vodafone has said it will use the windfall from its US investment to improve the speed and coverage of its networks, investing in 4G technology, and in expanding its range of services. But a key deal in Vodafone's strategy of moving from mobile phones to selling more broadband and television services hangs in the balance. | Vodafone has said it will use the windfall from its US investment to improve the speed and coverage of its networks, investing in 4G technology, and in expanding its range of services. But a key deal in Vodafone's strategy of moving from mobile phones to selling more broadband and television services hangs in the balance. |
Its €7.7bn (£6.5bn) offer for Kabel Deutschland will expire at midnight Frankfurt time on Wednesday unless at least 75% of the German group's shareholders accept the deal. | Its €7.7bn (£6.5bn) offer for Kabel Deutschland will expire at midnight Frankfurt time on Wednesday unless at least 75% of the German group's shareholders accept the deal. |
Including shares already tendered, Vodafone held 19.88% of Kabel Deutschland's stock by mid afternoon on Tuesday 10 September, Vodafone said in a statement on Wednesday. That compares with close to 12% last Friday. | Including shares already tendered, Vodafone held 19.88% of Kabel Deutschland's stock by mid afternoon on Tuesday 10 September, Vodafone said in a statement on Wednesday. That compares with close to 12% last Friday. |
"There is a significant risk that we can't get 75%," said one analyst, who asked not to be named. "Typically you would end up with a large wodge coming in the last day, but when you see a big gap and a significant other shareholder increasing their stake it makes you think it will be tougher to get that 75% hurdle." | "There is a significant risk that we can't get 75%," said one analyst, who asked not to be named. "Typically you would end up with a large wodge coming in the last day, but when you see a big gap and a significant other shareholder increasing their stake it makes you think it will be tougher to get that 75% hurdle." |
The hedge fund Elliott Capital Advisors doubled its stake in the German group to 10.9% last week. Hedge funds sometimes hold on to stock until after a deal is approved, demanding a higher price in order to be squeezed out at a later date when the buyer wants to take full control. | The hedge fund Elliott Capital Advisors doubled its stake in the German group to 10.9% last week. Hedge funds sometimes hold on to stock until after a deal is approved, demanding a higher price in order to be squeezed out at a later date when the buyer wants to take full control. |
Despite pressure from activist investors and major shareholders, who support the deal but fear it may fail, Vodafone said it would not lower the threshold for acceptances, or extend the deadline, or raise the price of its €84.50 per share offer. | Despite pressure from activist investors and major shareholders, who support the deal but fear it may fail, Vodafone said it would not lower the threshold for acceptances, or extend the deadline, or raise the price of its €84.50 per share offer. |
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