Verizon Looking to Buyout Vodafone's Verizon Wireless Stake for a Cool $100B+
April 25, 2013 10:00 AM
comment(s) - last by
Pending bid is Verizon Communications' second attempt to purchase Vodafone's stake
You might notice that whenever we report on news about Verizon Wireless we mention the Vodafone Group Plc. (
). That's because while America's top wireless carrier shares the name of its majority (55 percent) owner Verizon Communications Inc. (
), the UK-based Vodafone Group owns 45 percent of it.
I. Verizon Communications Aims to Complete Massive Buyout
suggests that may change with a brewing offer by Verizon Communications to buy out Vodafone's stake. Experts predict the offer may reach well above $100B USD. These experts say a 50-50 mix of cash ($50B USD cash) and stock (roughly 965m shares of VZ at current prices). The company is reportedly confident it can raise the cash for the deal via bank financing.
The prospective deal is boosted by Verizon's high share prices. Shares of Verizon Communications have risen 20 percent this year as it
has performed well
as rivals struggled.
A "top 40 Vodafone investor" is quote anonymously by the report stating, "I'd be delighted with $135 billion, but there's absolutely no way it will be $100 billion. The guidance I have had from someone close to the company is that they are looking at $125-130 billion."
Verizon Communications is willing to pay
for Vodafone's VZW stake.
[Image Source: Julie Jacobson/AP]
The report claims to have definitive knowledge that Verizon Communications has hired banking and legal advisors to craft the bid. Vodafone is reportedly wary of taking a $20B USD capital gains tax hit on the buyout, so Verizon Communications may have to structure the deal in a tricky manner. Sources say that Verizon's hired team estimates they could trim the tax hit to around $5B USD.
Verizon Communications reportedly is willing to arrange the deal in private with Vodafone executives, but if they don't bite it's also willing to take the deal public -- directly to Vodafone shareholders.
The deal will likely be discussed at Verizon's board meeting, which is to be held next week.
II. Gotta Know When to Hold Them, Know When to Fold Them
A top 15 shareholder told
anonymously that they expect the company to give the lion's share of the sale directly to shareholders and not to horde it. He or she comments, "I don't really see this as a surprise. The talk about this deal has been quite intense recently. They should look to return a large amount to shareholders, retaining a relatively small amount for deleveraging and bolt-on deals. I don't think shareholders would be pleased with Vodafone viewing any disposal proceeds as an acquisition war chest."
The Verizon Wireless stake is estimated to account for 75 percent of Vodafone's net worth, as Verizon Wireless has soared as king of the U.S. market, even as Vodafone's European units have struggled.
Vittorio Colao, Vodafone's CEO, has expressed wariness about selling his company's crown jewels. He faces a tough decision. If he holds on to the stake longer he could get Verizon Communications to offer a bigger buyout and could also buy time for his European holdings to stabilize.
Vodafone's chief faces a tough decision on whether to sell or hold out.
[Image Source: Sarah Lee/The Guardian]
On the other hand, completed or pending consolidations -- namely the buyout of Sprint Nextel Corp. (S) by either
Japanese carrier Softbank
American satellite television firm
), plus Deutsche Telekom AG's (
partially acquire MetroPCS
Communications Inc. (
) and merge it with the T-Mobile USA -- may make the market more competitive. If Verizon loses subscribers or even is viewed as having a weakening grip on the market, its value could slide.
Verizon Communications was created in 2000 by the merger of Bell Atlantic Mobile and GTE Wireless. That merger ported a deal with Vodafone by Bell to invest $49.5B USD along with $40.5B USD from Vodafone to create a wireless network.
Four years later, Verizon Communications almost succeeded in buying out Vodafone's stake. The deal was driven by Vodafone's bid to buy AT&T Wireless, a deal that would have forced it to divest from the Verizon Wireless stake. Vodafone was hoping to rebrand AT&T Wireless as a "Vodafone" unit introducing its brand in the U.S. market.
But Cingular beat out Vodafone's bid. The collapse of that deal also sunk the prospective stake sale in Verizon Wireless. Now, almost a decade later, that sale may finally be on the eve of completion.
This article is over a month old, voting and posting comments is disabled
4/26/2013 8:18:11 AM
ATT is not as good as verizon. Some area they are better but most are not.
T-mobile is in the process or building more towers? every carrier is in the process of building more towers. Developing countries are always developing but they just never seem to catch up.
Sprint still have bad service and customer service overall. Even with record sales, they are still in the red.
Verizon also installs signal boosters/repeaters in tunnels and metros where signals are weak or nonexistent. The other carriers do it too but Verizon is the most widespread one. It makes a whole world of difference when your phone works everywhere you go.
4/27/2013 11:03:52 PM
I'm a Verizon subscriber and feel the same way. People fail to realize you get what you pay for, though in AT&T's case...
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
Dish Looks to Scoop SoftBank, Offers $25.2B USD for Sprint
April 15, 2013, 11:22 AM
T-Mobile, MetroPCS are Ready to Merge, After DOJ, FCC Approvals
March 12, 2013, 5:11 PM
Verizon Earnings Sag, but Posts Record Subscriber Increase Driven by iPhone
January 22, 2013, 3:19 PM
Softbank to Take 70 Percent Stake in Sprint for $20B
October 15, 2012, 7:32 AM
Deutsche Telecom to Partially Acquire, Merge MetroPCS w/ T-Mobile USA
October 3, 2012, 11:45 AM
Inspiron Laptops & 2-in-1 PCs
September 25, 2016, 9:00 AM
The Samsung Galaxy S7
September 14, 2016, 6:00 AM
Apple Watch 2 – Coming September 7th
September 3, 2016, 6:30 AM
Apple says “See you on the 7th.”
September 1, 2016, 6:30 AM
Apple sued because of iPhone 6 Touch Disease
August 31, 2016, 7:00 AM
Get Ready to wait in line – iPhone 7 due September.
August 18, 2016, 7:15 AM
Most Popular Articles
Are you ready for this ? HyperDrive Aircraft
September 24, 2016, 9:29 AM
Leaked – Samsung S8 is a Dream and a Dream 2
September 25, 2016, 8:00 AM
Yahoo Hacked - Change Your Passwords and Security Info ASAP!
September 23, 2016, 5:45 AM
A is for Apples
September 23, 2016, 5:32 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM
Latest Blog Posts
Are farm children less likely to have allergies and asthma in adulthood?
Sep 30, 2016, 5:00 AM
MH 17 shot down by missile 'brought from Russia' into Ukraine's rebel territory
Sep 29, 2016, 5:00 PM
Burlington Gun Attack
Sep 27, 2016, 5:00 AM
Who is in Risk of Getting Oral Cancer?
Sep 23, 2016, 6:02 AM
France Bans Plastic Eating Utensils in Restaurants
Sep 18, 2016, 10:49 AM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information