Verizon Communications Chairman & CEO Hans Vestberg. Photo credit: Steve Jennings/Getty Images for TechCrunch, under Creative Commons license

Telecoms giant Verizon has announced that it’s reached a deal to acquire Tracfone, a well-known American prepaid, no-contract mobile phone provider, from Mexican telecoms firm America Movil. The acquisition deal is valued at $6.9 billion, consisting of $3.125 billion in cash, $3.125 billion in stock, and an additional $650 million worth of conditional milestone payments. Verizon expects the acquisition to close in the second half of next year. Following the acquisition, all of Tracfone’s current 850 employees will transition to be housed under Verizon. 

Tracfone’s history traces to being founded as Topp Telecom in 1996 in Miami, Florida. Three years after its founding, the then Topp Telecom was majorly bought out by Telmex, Mexico’s largest telecom company. In 2000, Telmex spun off its mobile unit, America Movil, which has controlled Tracfone up until this sale. Tracfone is the largest reseller of wireless services in the US, currently with 21 million subscribers in the country. Out of that subscriber count, 13 million rely on Verizon’s own wireless network through an existing wholesale agreement the company has with Tracfone. Following the acquisition, Verizon expects to bring more of its products to Tracfone customers and also expand the wireless services reseller’s distribution channels. 

Investment bank Credit Suisse acted as financial advisor to Verizon over the acquisition.

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