Reference no: EM131404569 , Length: 3

Topic: Business Strategy and Policy

There have been a number of huge merger deals in the not-too-distant past whose buyout numbers reached into low orbit. The most notorious -- and most scoffed at -- must be when AOL met Time Warner: $182 billion exchanged hands in 2000 before eventually vaporizing (most of it, anyway) along with the supposed synergies the transaction was supposed to generate.

But that was at right at the peak of the dot-com madness. No company would ever fall for that kind of hysterical deal making again, right? Maybe not. Never underestimate the appeal of financial madness, especially to those who should be minding the asylum.

In this case study you are to analyze the strategic scope of the horizontal acquisition by Verizon Communications (hereafter referred to as Verizon) of Verizon Wireless from Vodafone. Discuss whether or not this deal improves Verizon's sustainability of its resources and its performance? Does this acquisition meet the two tests of broad scope? Is so how? If not why not? How does the acquisition of this strategically valuable resource meet the Collis and Montgomery resources tests discussed in Lesson Topic 1? How is value created by this acquisition?

In two decades, Vodafone became the telecommunications leader in Global Systems for Mobile networks (www.associatedcontent.com). Vodafone provides innovative and cutting edge telecommunications services on the largest wireless network on earth.

Verizon Wireless is a joint venture between Verizon Communications out of New Jersey and the European-owned telecommunications company "Vodafone." Verizon Wireless is a wireless communication carrier that operates in the continental United States. IT was born from a joint venture between Bell Atlantic (which would later become Verizon and Vodafone in 1999. Verizon Wireless has been very good to the partners, and they have been able to split sizable profits from the deal over the past couple of years. In 2012, Vodafone received $8 billion in dividend payments for its 45% share of the venture. Vodafone was formed in 1983 as a joint venture between Rascal Electronics (a UK electronic firm) and Millicom (a US telecom company), and was granted one of two mobile phone licenses in the UK (www.associatedcontent.com). That became the UK's first mobile license. The name Vodafone came from the firm's goal to establish a voice and data services over cellular telecommunication networks. In which, the VO is represents voice and the DA symbolizes data, hence Vodafone (www.associatedcontent.com). In 1985, Vodafone launched its service but as a Rascal subsidiary (www.vodafone.com). In May 2000, Vodafone launched Verizon Wireless (www.vodafone.com). Vodafone and Bell Atlantic combined their US wireless assets to make up Verizon Wireless (www.vodafone.com). Vodafone later launched YORN (Young Original Network), first global and integrated communications network, a brand new concept of content initiatives, events and offerings for the younger generation (www.vodafone.com).

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