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Vodafone holders want Verizon to bid for the whole company

Posted: , by Alan F.

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Vodafone holders want Verizon to bid for the whole company
With Verizon Communications apparently willing to pay $100 billion USD for the 45% stake in Verizon Wireless that is owned by overseas carrier Vodafone, six investors in the latter say that Verizon's bid is not enough and they want to see the U.S. company throw another $20 billion into the pot. This comes on the heels of a report that Verizon has hired legal and financial help to advise it in completing the transaction.

According to speculation, the deal is expected to be 50% stock and 50% cash. Despite the decent amount of cash associated with the deal, the half dozen major Vodafone holders say that if Verizon won't raie its bid to $120 billion for the Verizon Wireless stake, they would prefer to see Verizon make a bid for all of Vodafone.

What has these holders concerned is the opinion that the Verizon Wireless stake is the best part of Vodafone and if it is sold, analysts, traders and investors would have nothing left to focus on except for Vodafone's struggling performance in the European market. The stake in the largest U.S. carrier accounted for half of Vodafone's operating profit for the six months ended September 2012. It also received a 2.4 billion GBP ($3.7 billion USD) dividend from Verizon Wireless of which 1.5 billion GBP ($2.3 billion USD) was used to buy back Vodafone stock.

While shareholders contacted by Reuters said that a $120 billion deal for the Verizon stake would be about right, the market cap for all of Vodafone is only $145 billion. One possible negative is a tax bill that could reach between $5-$20 billion USD.

"Without wishing to be too disrespectful, (Vodafone is) sitting with a rather ugly set of assets once you lose the Verizon Wireless stake."-Ralph Brook-Fox, UK equities fund manager. Ignis Asset Management

source: Reuters

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posted on 27 Apr 2013, 18:56

1. james1 (Posts: 97; Member since: 16 Mar 2013)

Verizon would have to borrow LOTS AND LOTS of money if it wanted to buy Vodafone, plus I don't think Verizon is going to do it cause it would be too hard to manage Vodafone and Verizon at the same time.

posted on 27 Apr 2013, 19:06 1

2. sipha (Posts: 439; Member since: 12 May 2012)

Mmmh, maybe am not reading the story right...but from what i gathered Verizon Communications isn't looking to buy vodafone, it just wants to buy vodafone's 45% stake in Verizon wireless...a company they own jointly!

posted on 28 Apr 2013, 16:19 1

8. sleepyjohnny (Posts: 151; Member since: 16 Dec 2009)

well that is what Verizon wants to do. This article is reporting the share holders of Vodaphone would rather Verizon just buy out the entire company, because they think the Verizon share that they own is what's most profitable and valuable to them.

posted on 27 Apr 2013, 19:22 1

3. TheMan (Posts: 493; Member since: 21 Sep 2012)

Vodafone would become VZW's T-Mobile in reverse and would be a bigger headache to VZW than what Deutche Telecom ever got from TMO.

posted on 27 Apr 2013, 22:10 1

4. belovedson (Posts: 1052; Member since: 30 Nov 2010)

i agree there's really no incentive to buy vodafone. unless verizon plans on moving its hq overseas or somethingg

posted on 27 Apr 2013, 22:44 3

5. Daftama (Posts: 619; Member since: 03 Nov 2012)

Eventually they want to get shares from over seas...the only new customers they are getting is new generation coming and the rest bounce back and forth. No room to grown...why soft bank wants to enter the u.s market....its a way to grow...

posted on 28 Apr 2013, 14:51 1

6. 9thWonderful (Posts: 232; Member since: 24 Jan 2013)

from a Verizon Communications stand point they are trying to remove extra hands from the pot by buying Vodafone's shares. from Vodafone's stand point to just buy their shares and not the shares + Vodafone would be detrimental to Vodafone as it wouldn't leave them very attractive w/out Verizon Wireless (as the guy said in the article). i don't see a point in Verizon Com. buying Vodafone unless they are going take that as an opportunity to make Verizon Wireless a global carrier instead of just a US carrier which isn't a bad idea. the current international rates are astronomical right now and esp. in terms of data usage. A lot of VZW customers travel abroad and could benefit from this type of venture and also it opens up a new market of customers competing w/Orange, Rogers, Telus & some of the other international carriers that i'm not aware of.

posted on 28 Apr 2013, 15:41 1

7. nyamo (Posts: 274; Member since: 19 Mar 2011)

the only problem i see is verizon has a legacy network of cdma that is still used by many of its subscribers. whereas i assume vodafone is mostly a gsm network.... while it is a good chance for some global growth, i see the 2 networks becoming a headache to manage

posted on 28 Apr 2013, 20:33

10. stormhaven_8 (Posts: 6; Member since: 25 Jun 2012)

Not a problem at all. VZW is looking for a way to ditch cmda entirely in the future anyway. Since LTE is a GSM variant and all of their current handsets have a LTE radio focus will soon be shifted to Voice over LTE. Not only is VOLTE for cost efficient for VZW but it also enables them to ditch the dual CDMA radio in new phones thus reducing cost. I personally would love to see VZW make a bid for all of Vodafone, from a competitive market standpoint it would catapult the carrier to global status and open millions to doorways for future growth. ....maybe.. even maybe an eventual IPO....

posted on 28 Apr 2013, 16:50

9. corporateJP (Posts: 2458; Member since: 28 Nov 2009)

LOL. Verizon is over the barrel for a change on this one. LOL.

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