The board of Verizon Communications is expected to rubber-stamp a staggering $130 billion purchase of Vodafone’s 45 per cent stake in Verizon Wireless today (2 September) after the UK operator reportedly agreed to the deal yesterday.

For Vodafone, a shareholder windfall and a strengthened war chest for acquisitions would all result from the third-largest merger and acquisitions deal of all time. An official announcement, widely expected after the London market closes today, should reveal how much cash will be retained by the group and how much returned to investors.

According to Citigroup estimates, quoted by Reuters, Vodafone shareholders could receive up to $40 billion in cash and Verizon common stock. Around $30-38 billion in deferred proceeds after paying tax and reducing debt would then be left, reckons Citigroup, giving Vodafone’s war chest for acquisitions a significant boost.

With Verizon Wireless no longer part of the Vodafone Group – the US mobile operator accounts for over half of Vodafone’s adjusted operating profits – chief executive Vittorio Colao will be under increased pressure to find new areas of growth, particularly as its mobile-only operations in Europe continue to struggle.

Whether or not Vodafone looks to bolster its European operations, or expand in emerging markets, is open for debate.

“Vodafone is unlikely to have contemplated this deal without a firm M&A strategy in place, and with the company expecting to receive around $120 billion from the deal after tax (and the transfer of Verizon’s holding in Vodafone Italy), a continuation of the recent focus on developing its ‘quad play’ operations in Europe seems likely,” GSMA Intelligence analyst Calum Dewar told Mobile World Live.

“Colao believes that bundling fixed-line, internet and TV services with mobile will help Vodafone gain market share, reduce churn and boost profit margins, and he has recently overseen the purchases of Cable & Wireless Worldwide in the UK as well as Kabel Deutschland to this end. Thus it would be no great surprise to see Vodafone use the proceeds of the deal to purchase cable assets in its other big European markets such as Spain, Italy and Netherlands.”

A potential takeover candidate group is John Malone’s European cable company Liberty Global, although Reuters’ sources think this is unlikely.

“Liberty would not be a target for Vodafone,” said one in July. “There are countries where Liberty is present where Vodafone is not, so no synergies: Switzerland, Belgium, Poland. And then there are places with too much overlap that would pose antitrust issues, most importantly Germany and Britain.”

GSMA Intelligence’s Dewar also praised Colao’s timing: “While Vodafone has been under varying levels of pressure to sell up for several years, it seems Colao has now decided that the time is right, with Verizon very much ahead of its major US rivals in terms of customer base, ARPU and 4G-LTE deployment – but facing the prospect of potentially stiffer competition in the future due to other recent M&A deals struck by Sprint with Japan’s SoftBank and T-Mobile with MetroPCS.”