Verizon, AT&T Rumored to Be Planning Vodafone Buyout

 
 
By Michelle Maisto  |  Posted 2013-04-02 Email Print this article Print
 
 
 
 
 
 
 

The latest rumor about the Verizon-Vodafone relationship is that Verizon and rival AT&T will together buy Vodafone.

Verizon and AT&T reportedly are putting together a bid to buy Vodafone.

Verizon and Vodafone, which is the world's second-largest mobile carrier behind China Mobile, jointly own Verizon Wireless, the largest mobile carrier in the United States.

According to the Financial Times blog Alphaville, Verizon would acquire Vodafone's 45 percent stake in Verizon Wireless, and Vodafone's extensive business outside of the United States would go to AT&T.

Vodafone Group has more than 407 million customers and operators in more than 30 countries across five continents.

According to the April 2 report, Verizon and AT&T could pay approximately $3.95 a share—a 40 percent premium on Vodafone's April 1 stock price—lifting Vodafone's value to $245 billion. If this turns out to be the case, it would make it the largest mergers and acquisitions (M&A) deal on record.

It has also been rumored that Verizon could more simply buy Vodafone's share of Verizon Wireless, though John Hempton, chief investment officer at hedge fund Bronte, has argued that that scenario makes less fiscal sense.

"Because Verizon Wireless has been so successful, selling Verizon Wireless would result in a massive tax bill," Hempton wrote in a March 13 blog post. "It makes it far more tax efficient for Verizon to buy Vodafone in its entirety than to buy Verizon Wireless. Tens of billions of dollars more efficient."

The Alphaville report sent Vodafone's stock price soaring April 2 by as much as 6 percent. In January, at the 2013 Consumer Electronics Show, the stock had similarly jumped nearly 3 percent, after Verizon CEO Lowell McAdam said Verizon was considering a buyout of Verizon Wireless.

In February, Cnet reported, Vodafone CEO Vittorio Colao further prompted speculation when he told the The Wall Street Journal that his company was keeping an open mind "on everything."

With smartphone sales gradually slowing amid sales saturation, the deal would be a boon to AT&T, which has been rumored to be considering an acquisition abroad.

The Wall Street Journal reported in January that a purchase in Europe would help AT&T "escape constraints on growth at home" and enable it to offer upgraded technologies in Europe and more lucrative pricing strategies.

 



 
 
 
 
 
 
 
 
 
 
 

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