Verizon Communications in advanced talks for acquisition of Vodafone stake: report
29 Aug 2013
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Verizon Communications Inc is in advanced talks for acquisition of Vodafone Group Plc's 45-per cent stake in their US joint venture for about $130 billion, Bloomberg reported late yesterday, citing people with knowledge of the matter.
According to two people who spoke to Bloomberg, Verizon was working with several banks to raise $10 billion from each to finance about $60 billion of the deal and an announcement could come as soon as 2 September.
Earlier, The Wall Street Journal had reported that the companies had restarted talks but it was not immediately clear as to whether they had resolved disagreements over price or whether Verizon come out with a specific offer.
In an April report, Reuters said Verizon had hired advisers for a possible $100-billion bid and was contemplating a roughly 50:50 cash and stock offer for the 45 per cent stake in Verizon Wireless it did not already own.
Most analysts had said at the time that the roughly $100 billion figure contemplated by Verizon was too low and that the value of the Vodafone holding was in the vicinity of $120 billion.
The Journal said significant shifts in financial markets, including increasing interest rates as also changes in the US cellphone business, had brought the two sides closer together.
Vodafone chairman Gerard Kleisterlee had last month said the company would seriously consider any offer for its stake by Verizon Wireless if it offered greater value to investors than the current status quo.
Meanwhile, Vodafone confirmed it was in talks with Verizon Communications over the sale of its 45-per cent stake in their joint venture, Verizon Wireless.
Reports published earlier this year had said, though Verizon was looking to buy Vodafone's stake in Verizon Wireless for about $100 billion, there was speculation that the stake was worth more than the amount.
Shares in Vodafone rose 8 per cent following the company's announcement.
Vodafone said in a statement, "Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications Inc regarding the possible disposal of Vodafone's US group whose principal asset is its 45% interest in Verizon Wireless.
"There is no certainty that an agreement will be reached."
Verizon Wireless, the largest and most profitable phone operator in the US, boasts a subscriber base of100 million customers.
If the deal were to go ahead, it would be one of the largest corporate transactions of all time, providing a massive cash injection for the UK telecom firm, but at the same time leaving Vodafone without a highly profitable non-European partnership.
According to commentators, Verizon had been looking to buy out Vodafone's stake in Verizon Wireless for some years, however, the price had all along proved to be a considerable hurdle.
According to two people who spoke to Bloomberg, Verizon was working with several banks to raise $10 billion from each to finance about $60 billion of the deal and an announcement could come as soon as 2 September.
Earlier, The Wall Street Journal had reported that the companies had restarted talks but it was not immediately clear as to whether they had resolved disagreements over price or whether Verizon come out with a specific offer.
In an April report, Reuters said Verizon had hired advisers for a possible $100-billion bid and was contemplating a roughly 50:50 cash and stock offer for the 45 per cent stake in Verizon Wireless it did not already own.
Most analysts had said at the time that the roughly $100 billion figure contemplated by Verizon was too low and that the value of the Vodafone holding was in the vicinity of $120 billion.
The Journal said significant shifts in financial markets, including increasing interest rates as also changes in the US cellphone business, had brought the two sides closer together.
Vodafone chairman Gerard Kleisterlee had last month said the company would seriously consider any offer for its stake by Verizon Wireless if it offered greater value to investors than the current status quo.
Meanwhile, Vodafone confirmed it was in talks with Verizon Communications over the sale of its 45-per cent stake in their joint venture, Verizon Wireless.
Reports published earlier this year had said, though Verizon was looking to buy Vodafone's stake in Verizon Wireless for about $100 billion, there was speculation that the stake was worth more than the amount.
Shares in Vodafone rose 8 per cent following the company's announcement.
Vodafone said in a statement, "Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications Inc regarding the possible disposal of Vodafone's US group whose principal asset is its 45% interest in Verizon Wireless.
"There is no certainty that an agreement will be reached."
Verizon Wireless, the largest and most profitable phone operator in the US, boasts a subscriber base of100 million customers.
If the deal were to go ahead, it would be one of the largest corporate transactions of all time, providing a massive cash injection for the UK telecom firm, but at the same time leaving Vodafone without a highly profitable non-European partnership.
According to commentators, Verizon had been looking to buy out Vodafone's stake in Verizon Wireless for some years, however, the price had all along proved to be a considerable hurdle.
