This morning Vodafone confirmed that it is in “advanced discussion” with Verizon Communications over the disposal of its 45% stake in Verizon Wireless.
In a stock exchange filing, the UK company said the deal would be for US$130bn and largely…
This morning Vodafone confirmed that it is in “advanced discussion” with Verizon Communications over the disposal of its 45% stake in Verizon Wireless.
In a stock exchange filing, the UK company said the deal would be for US$130bn and largely comprise of cash and Verizon common stock.
The long-mooted deal now appears imminent with multiple reports saying an agreement could be announced after market close in London today. Vodafone’s board is said to have approved the deal yesterday while Verizon’s board is reportedly set to rubberstamp its acquisition today.
The New York-based telco is reported to be looking to raise up to US$65bn in financing to fund half of the consideration through a mix of bonds and loans.
JP Morgan, Morgan Stanley, BofA Merrill Lynch and Barclays are joint lead arrangers on the financing according to multiple reports.
Guggenheim Partners and former Morgan Stanley banker Paul Taubman are reportedly advising Verizon. Goldman Sachs and UBS are advising Vodafone.
Were a deal to complete, it would be the third largest M&A deal in history behind Vodafone’s acquisition of Mannesmann and AOL’s acquisition of Time Warner.
Commenting on the deal Echelon Research managing partner Darren Ward told TelecomFinance that the UK-listed operator looked to have a done a good deal.
“In a nutshell our view is that Vodafone deserves some credit for having held out for a good price and is choosing a good time to sell.”
“Equity markets are high, debt financing is again available in a window that may not last very long [and] growth in the US mobile market has probably peaked.”
Meanwhile Berenberg analyst Paul Marsch raised the spectre of capital gains tax. Verizon’s CFO Fran Shammo has previously indicated that a transaction can be done in a tax efficient manner and some estimates have put the bill at US$5bn, in spite of a previous expectation of more than US$20bn.
In a note Marsch hoped Verizon would provide a tax indemnity if the bill is minimal in case Vodafone received political blowback.
