It appears that not everyone is pleased and excited about the Verizon Communications Inc. (NYSE: VZ) $130 billion buyout deal with Vodafone Group PLC (NASDAQ: VOD). The independent research firm Argus has made some changes to its theoretical model portfolios and it has decided to eject Verizon from its hypothetical Growth & Income model portfolio. Note though that Argus is maintaining Verizon as a key position in its Equity Income model portfolio.

Argus said that Verizon was one of its longest holdings, dating all the way back to 2003. Imagine how many people hold a stock for 10 years. Not many.

Verizon’s payment to Vodafone is $58.9 billion in cash and $60.2 billion in stock, which Argus thinks is simply too much. The firm said:

We would have liked Verizon to have driven a harder bargain; $130 billion was Vodafone’s initial asking price. Verizon CEO Lowell McAdam was concerned about the rising cost of debt and the ability to use Verizon’s current share price as a strategic asset to fund the deal … we are concerned that the incremental debt load and additional financial obligations could slow earnings per share momentum in the intermediate term. In our view, the Verizon shares could be subject to a period of uncertainty in the time preceding the deal close, which is expected in 2014.

Argus also noted that Verizon’s management projected 10% earnings accretion on the closing of the deal. The share price has been 31%, plus it has averaged a 4% dividend. Argus effectively said that Verizon simply no longer meets its total return criteria for the Growth & Income portfolio, but it also said that Verizon does still remain a sound holding for income-oriented investors.

Verizon Wireless has paid $11.5 billion in dividends to Vodafone since the beginning of 2012. The company will now be freed of that obligation once the 45% stake repurchase closes. Argus also showed that Verizon’s 2012 cash flow from operations of $31.5 billion covered its annual dividend costs of $13 billion by more than three times.

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