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Verizon May Buy Out Vodafone Shares

August 29, 2013
verizon

Vodafone Group confirmed Thursday it was in talks with Verizon Communications to sell its share of their U.S. wireless venture.

Vodafone said it could not guaranteeing a deal would be completed, but persons close to the talks said Verizon had talked with banks about loans that it would need to complete the deal, The Wall Street Journal reported Thursday.

The biggest sticking point in the talks is likely to be the price, the Journal reported. Sources close to the talks said Verizon was prepared to pay as much as $130 billion for Vodafone's stake in the venture.

The problem of price has kept the two companies from striking a deal in the past, as Verizon has for years considered buying Vodafone's 45 percent stake of Verizon Wireless, the Journal said.

In January, Verizon's Chief Executive Officer Lowell McAdam said Verizon had the financial means to buy Vodafone's share. Verizon Chief Financial Officer Fran Shammo later said that the company had come up with a financial structure for a deal that would avoid a huge tax bill.

Analysts said a buying Vodafone's stake in the country's largest cellphone carrier would likely cost more than $100 billion.

Senior research analyst Craig Moffett at Moffett research said that the possibility of the U.S. Federal Reserve unwinding its $85 billion per month asset purchasing program could have revived the stalled discussions.

"Interest rates are presumably the real catalyst here. With interest rates rising, there has to be some sense of urgency that is now or never," Moffett said.

Presumably, Verizon would have to borrow tens of billions of dollars to complete the deal, making any gains in interest rates a significant issue.




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Source: Copyright UPI 2013


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