Verizon Buyout Of Vodafone’s US Stake Could Become Official Monday
September 1, 2013

Verizon Buyout Of Vodafone’s US Stake Could Become Official Monday

redOrbit Staff & Wire Reports – Your Universe Online

Officials from Verizon and Vodafone will be working hard this Labor Day weekend, putting the finishing touches on the largest takeover deal in over a decade, according to various media reports.

A potential agreement between the two firms would see the American telecom and broadband company buy the British firm out of their wireless venture in the US for upwards of a reported $130 billion, Bloomberg’s Matthew Campbell and Amy Thomson said on Friday. The deal could be official announced as soon as Monday.

“Completing a transaction that would rival the ill-fated merger of AOL and Time Warner Inc. in size will be far from simple, involving payment in cash and shares likely staggered over a number of years,” Campbell and Thomson added, citing sources familiar with the talks. “The companies also have to pull off a balancing act to minimize Vodafone’s tax liability while avoiding a public-relations fracas for paying too little.”

Vodafone owns a 45 percent stake in Verizon Wireless, and the rumored value of the transaction means that it would trail only the AOL-Time Warner merger and Vodafone’s own $202.8 billion acquisition of Mannesmann as the largest takeovers on record, noted New York Times writer Michael J. De La Merced.

He also pointed out the agreement “could mean huge fees for the bankers and lawyers” who helped broker the transaction. Perhaps more importantly to consumers, however, is what the deal could mean for Vodafone’s future.

According to Juliette Garside of The Guardian, there is speculation the company itself could become a takeover target in a second transaction of similar value. Under chief executive Vittorio Colao, Vodafone has positioned itself to focus on the European fixed-line broadband and television market, and industry experts believe going forward Colao will either have to continue building the firm, or look to sell out to a firm such as AT&T or Softbank.

“Vodafone might also now be in play,” analysts at Olivetree wrote, according to Garside. “[AT&T] have been actively on the search for European deals and reportedly have already been rebuffed in their attempts to do some form of transaction with Telefonica… Vodafone would not only be a smaller deal but come with a better balance sheet.”

“The best choice is to invest more in being aggressive around 4G because if anyone is going to buy Vodafone, that is what they would do. AT&T has already said very publicly it doesn't think the Europeans are investing enough in 4G,” added James Barford of Enders Analysis. “The opportunity is to create a clear blue water between your network quality and the network quality offered by discount operators.”