Vodafone Group Plc. (0.1%) (VOD - $35.18 - NASDAQ)(VOD
) is the second largest mobile operator in the world based on number of subscribers. Vodafone's operating units span Europe, Africa, and Australasia. Vodafone's single most valuable asset has been its 45% equity stake in Verizon Wireless in the U.S. In the third largest M&A transaction ever, Vodafone agreed on September 2 to sell its interest to Verizon for a total consideration of $130 billion. The price represents a multiple of 9.4x the trailing twelve month EBITDA for the unit and approximately 173 pence per Vodafone share. On completion of the transaction, which is expected in the first quarter of 2014, Vodafone intends to return $84 billion to shareholders or 71% of the net proceeds. Vodafone also announced, along with the deal, a new investment program (Project Spring) with £6 billion of organic investment over the next three years to further enhance its network and service leadership in key markets. Some £13.4 billion of the remaining proceeds will be used to reduce net debt, leaving the company with significant flexibility and net debt/EBITDA below 1.0x. The sale of the Verizon Wireless stake is a transformational event for Vodafone. The combination of Project Spring and potential further acquisitions, such as the pending purchase of Kabel Deutschland, will propel Vodafone into a market leading position across its managed businesses. On a pro forma basis, Vodafone shares remain attractive, trading at an undemanding 4.8x March 2014 EBITDA.
From Mario Gabelli
)'s third quarter 2013 commentary