Verizon Communications (NYSE:VZ) has been talking to financial analysts about the price it may be willing to pay to buy Vodafone's 45 percent stake in Verizon Wireless as a way to spur talks between the two telecom giants, according to a Bloomberg report.
Reuters reported last week that Verizon hired advisers in advance of a possible $100 billion cash and stock bid for Vodafone's stake, kickstarting another round of speculation about how and when the two companies will resolve the nature of their relationship.
According to the Bloomberg report, which cited unnamed sources, Verizon has told some analysts that it believes $100 billion is the fair value for Vodafone's holding. The report also said that Verizon Communications CFO Fran Shammo's comments on the company's April 18 first-quarter earnings conference call about how a potential deal might be taxed were also meant to send a signal. Shammo said the company is "extremely confident that such a transaction could be accomplished in a manner that is very tax-efficient and would not result in a tax on the gain in that stake."
Verizon declined to comment, according to Bloomberg.
According to Reuters, Vodafone investors want more than $100 billion and are pushing for a deal valued between $120 billion and $135 billion. Citing "six major Vodafone investors," mostly unnamed, the report said that they would prefer a full merger with Verizon instead of the $100 billion offer.
"It seems like the right time for Verizon to use its highly valued stock and the low interest rates in the market to acquire Vodafone's stake," BTIG Walt Piecyk, who thinks it would take more than $120 billion to buy out Vodafone's stake, told Bloomberg. "Verizon might regret not taking advantage and getting a deal done this year."
Also at play is what kind of tax advice Verizon is getting on the deal, according to a separate Reuters article. That report, which again cited unnamed sources, said that Verizon may have found a way to structure a deal for the 45 percent stake so that Vodafone can avoid a multibillion-dollar U.S. capital gains tax bill.
- see this Reuters article
- see this separate Reuters article
- see this Bloomberg article
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