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Verizon in Talks to Take Vodafone Stake in Big Red

Dan Jones
8/29/2013
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One of the most often-rumored acquisitions in the mobile sector could finally be coming to pass.

UK mobile giant Vodafone Group plc (NYSE: VOD) confirmed Thursday that it is in talks with Verizon Communications Inc. (NYSE: VZ) about selling its stake in the number one U.S. wireless operator, Verizon Wireless , to its American majority owner. Vodafone currently holds a 45 percent stake in Verizon Wireless.

If the talks come to fruition, a Verizon Wireless buyout would be one of the largest mergers and acquisitions deals in U.S. mobile history. The sums involved are expected to top $100 billion. (See Euronews: VOD Rises on Verizon Buyout Chat.)

Speculation about a Vodafone sell-off of its stake was rekindled this spring and continued since. (See Verizon Could Pay VOD $130B+ for Wireless Stake.)

Verizon has never made a secret of its desire to have full control of the wireless operation. Speculation about a buyout began not too many years after the partnership was first agreed on in 1999. (See Vodafone Hangs On to Verizon Stake.)

Vodafone has so far preferred to maintain its stake in the massive US wireless provider. The group frequently sees fat dividends from its US operator partnership. (See Euronews: Verizon Stake Pays Off for Vodafone.)

Vodafone could reportedly be looking for up to $130 billion for its Verizon Wireless stake. (See Euronews: Verizon's VOD Bid May Fall Short.)

— Dan Jones, Mobile Editor, Light Reading

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Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
9/2/2013 | 11:42:25 AM
Re: Funding?
Yeah it is, almost. Much of the publicly visible shareholder advice to Vodafone hasn't been all that good over the years. A few years ago -- just before the credit crunch -- activist shareholders mounted a campaign to get Vodafone to distrbute more cash and take on more debt. Luckily the management stood firm.

 Edit: They're returning most of the cash to shareholders. Fair enough.
kaop
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kaop,
User Rank: Light Beer
9/1/2013 | 2:26:25 PM
Re: Funding?
MarkC73:  Offering $100B for 45% stake is about a 75% premium from the current market capitalizion of Verizon.  This inflates the remaining 55% value by $56B.  Nice way of generating cash to compete the transacaion.
KBode
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KBode,
User Rank: Light Sabre
8/30/2013 | 10:59:34 AM
Re: Funding?
"I'd rather see VOD re-invest the cash while telecom operators (in most of the world) are cheap than return it all to shareholders."

 

Blasphemy!
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
8/30/2013 | 6:51:20 AM
Re: Funding?
Interesting, if speculative, theory: AT&T to aquire Vodafone (less the VZW Stake)

Robin Bienenstock watches Vodafone closely and seems to have a good read on the company. She seems, generally, to hold the view that Vodafone hasn't gained all that much from being a pan-Euoprean operator.

Edit: I'd rather see VOD re-invest the cash while telecom operators (in most of the world) are cheap than return it all to shareholders.
MarkC73
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MarkC73,
User Rank: Light Sabre
8/30/2013 | 4:52:00 AM
Re: Funding?
Here's an interesting article for those interested...

http://www.bloomberg.com/news/2013-08-29/vodafone-seen-as-at-t-prey-after-130-billion-verizon-deal-tech.html

Maybe it's not just Vodafone's plans that we should be interested in.
MarkC73
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MarkC73,
User Rank: Light Sabre
8/30/2013 | 3:54:32 AM
Funding?
With that much to fund, any details on how the deal would be done?  In Feb, people were talking about 50/50 stock/cash buyout.  Now with valuation of VzW on the upside we are definitely talking 100B+, Verizon already kind of  low on cash, and noone in the telcom carrier industry has 50B in the bank anyway.

The Market took the news as good as the stock was up on the news.  Which I guess makes sense, they've been wanting, as you stated, this to happen for a while now.  It was even rumored at one time about getting the Vodafone shareholders to speak up by leaking deal details, but if they can secure a large line of credit over a 2-3 pay deal with Vodafone, now would be prime to do it.

The next question will be what does Verizon have instore and what will Vodafone do with its new cash influx.
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