Verizon in talks to acquire Vodafone's 45% stake in wireless
Verizon Communications Inc. is in talks to acquire United Kingdom partner Vodafone Group Plc's 45 percent stake in Verizon Wireless in what would be the biggest deal in more than a decade.
The carriers are in advanced discussions about a sale of the holding for about $130 billion, according to people with knowledge of the matter. Verizon is working with several banks to raise $10 billion from each, or enough to finance about $60 billion of the buyout, two of the sources said, asking not to be identified because the talks are private.
An announcement could be made as early as Monday, sources said. The acquisition would give Verizon full ownership of the most profitable mobile phone company, ending a partnership of more than a decade that has paid billions in dividends to Vodafone. Verizon shares jumped 2.7 percent, and Vodafone surged 8.2 percent to its highest price since 2002.
“Verizon wants to be completely in control of its own destiny,” said Jan Dawson, chief telecommunications analyst with the New York office of London-based research firm Ovum. “This is fundamentally a recognition that wireless is the future.”
At $130 billion — almost Verizon's entire market value — the deal would be the biggest since Vodafone's acquisition of Mannesmann AG in 2000 and would give the U.K. carrier's finances a boost as Chief Executive Officer Vittorio Colao, 51, tries to revive its European businesses hurt by the region's debt crisis.
As part of the transaction, Verizon probably will sell back to Vodafone its 23 percent stake in Vodafone Italia, which could be worth about $5.3 billion, said two of the people.
In a statement, Newbury, England-based Vodafone said there's “no certainty that an agreement will be reached” as it holds discussions with New York-based Verizon. Bob Varettoni, a spokesman for Verizon, declined to comment.
“This deal is extremely important for Vodafone for their convergence strategy toward more cable assets because pure mobile operators will certainly experience capacity bottlenecks in the future,” said Leopold Salcher, an analyst at Raiffeisen Capital Management, calling $130 billion “a very good price.”
Verizon climbed to $47.82 in New York trading for a market capitalization of $137 billion. Vodafone rose to 204.75 pence in London, giving the company a market value of $154 billion.
“It's certainly a good deal for Vodafone,” said Craig Moffett, an analyst at Moffett Research LLC in New York. “It's probably good news for Verizon as well. This gives them much better growth and it gives them much better dividend coverage, and it's almost certainly going to be accretive to earnings.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.