Vodafone is in talks with US telco Verizon Communications over the disposal of its 45% stake in their joint venture Verizon Wireless.
The long-mooted sale would generate more than US$100bn for the UK operator according to consensus…
Vodafone is in talks with US telco Verizon Communications over the disposal of its 45% stake in their joint venture Verizon Wireless.
The long-mooted sale would generate more than US$100bn for the UK operator according to consensus estimates.
Vodafone’s stock has leapt 9% since the UK-listed group disclosed the discussions in a stock exchange announcement.
The confirmation came on the back of two press reports which suggested that Verizon Communications is looking to secure more than US$50bn from banks to help finance a deal, with one saying the New York-based telco was in “advanced negotiations” with Vodafone.
Vodafone is said to be looking for US$130bn for its stake, the reports said. As part of the deal Verizon Communications will probably sell back its 23% stake in Vodafone Italia to Vodafone which could be worth €4bn (US$5.3bn), according to the Bloomberg report citing two people with knowledge of the matter.
A sale of its US interests would give Vodafone a significant war chest to bolster its operations in Europe, and would likely result in a significant dividend for shareholders.
Vodafone’s stock closed at £190.10 (US$295) yesterday and hit £207.35 (US$321.7) this morning – more than a 9% jump.
Vodafone said there is no certainty that an agreement will be reached.
Verizon Communications has wanted to buy out the UK group for years but a difference in valuation has proved to be a stumbling block.
Vodafone’s potential tax bill from a sale has also hampered a deal, although that may not be such an issue according to Verizon Communications’ CFO. In its Q1 call Fran Shammo said a deal could be done “in a manner that is very tax-efficient, and would not result in a tax on the gain in that stake”.
In April Verizon Communications reportedly hired financial and legal advisors to prepare a bid that would see the US operator raise US$50bn in debt financing.
