Mexican telecommunications giant América Móvil is to sell its wholly owned subsidiary TracFone to Verizon Communications for $6.25 billion in cash and Verizon common stock.
As part of the deal, América Móvil will also be entitled to up to $650 million of contingent and deferred consideration pursuant to the terms of the transaction agreement.
Tracfone Wireless (Tracfone) is a pre-paid mobile telecom carrier and the largest mobile virtual prepaid service operator in the US, serving approximately 21 million subscribers.
Verizon, which is the largest US wireless carrier by number of subscribers, plans to provide new products for the lower end of the US telecoms consumer segment.
Hans Vestberg, chairman and chief executive of Verizon, was quoted by Reuters as saying the Tracfone purchase is a “strategic acquisition.”
“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,” Ronan Dunne, executive vice president and group CEO at Verizon Consumer Group, was quoted by media as saying.
Cleary Gottlieb represented América Móvil on the sale of its Tracfone unit.