A multi-billion dollar bid to acquire American Movil subsidiary, Tracfone, was announced Monday by Verizon Chairman and CEO, Hans Vestberg.
According to Yahoo Finance, Verizon’s proposed buyout package includes $3.125 billion in cash, $3.125 billion in stock, and an additional $650 million tied to performance goals. The transaction, expected to close late 2021, will expand Verizon’s portfolio into the value segment.
“Since its launch, Tracfone has developed strong consumer brands and has established itself as a clear leader in the value mobile segment,” said Ronan Dunne, Executive Vice President and Group CEO, Verizon Consumer Group. “This transaction firmly establishes Verizon, through the Tracfone brands, as the provider of choice in the value segment, which complements our clear leadership in the premium segment.”
Barron’s reported the acquisition “gives Verizon access to a segment of the wireless market that tends to outperform in a recession, when consumers look to save money on their phone plans and keeps TracFone out of competitors’ hands.” Tracfone brings to the table 21 million subscribers through over 90,000 retail locations nationwide.
“We’re looking forward to welcoming all of Tracfone’s customers and each of Tracfone’s nearly 850 valuable employees. We are excited to expand our relationship with Tracfone’s distribution partners, and when Tracfone’s customers become part of our family, they will get the best of both worlds – more choices, better services, and new features thanks to Verizon’s investment – but with the flexibility and control that they have come to value with its prepaid plans,” said Dunne.
In a press release by Verizon, the company said its 4G LTE and 5G networks will further develop Tracfone’s distribution channels and expand market opportunities.
“This transaction is aligned with what we do best: providing reliable wireless service alongside a best-in-class customer experience,” said Hans Vestberg, Chairman and CEO of Verizon. “We are excited about the opportunity to bring Tracfone and its brands into the Verizon family where we can put the full support of Verizon behind this business and provide exciting and compelling products into this attractive segment of the market. We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile.”