Verizon Communications Inc. said it plans to sell its 20.5-percent stake in Canadian telecommunications provider Telus Corp. beginning early next week. Verizon noted that its current stake in the company includes 48.5 million common shares and 24.9 million non-voting shares, and the sale is part of its ongoing strategy of divesting selected international investments while it focuses on core business growth opportunities such as broadband and wireless.
As part of the sale agreement, Verizon received approval from Telus’ independent directors as stipulated in the two companies’ long-term relationship agreement and will make a non-refundable $148.5 million payment to Telus.
Telus noted that following the sale the two companies will continue their business relationship with “certain adjustments to reflect changes in their business requirements,” and would “remain committed to each other’s cross-border services where capabilities and customer requirements permit.” Telus will also continue to have exclusive rights in Canada to Verizon trademarks, software and technology acquired prior to the sale and would also be released from its obligation not to compete in the United States.
To assist in the sale, which is expected to close before the end of the year, Verizon said it has engaged Merrill Lynch, Morgan Stanley and RBC Capital Markets as managing underwriters. Telus’ shares were trading down 46 cents per share early Wednesday at $24.94 per share.
Verizon’s divestiture is the second major withdrawal of a U.S. telecommunications provider from the Canadian market this year following AT&T Wireless Services Inc.’s sale of its 34-percent stake in Rogers Wireless Inc. for $1.3 billion. AWS’ sale allowed Rogers Wireless to complete its $1.1 billion purchase of Canadian wireless operator Microcell Telecommunications Inc., which had been fending off an $800 million hostile takeover attempt by Telus.
