Vodafone Confirms Talks to Sell Stake in Verizon Wireless
Published on: 28th Aug 2013
By: Ian Mansfield
Vodafone has confirmed that it is in talks to sell its 45% stake in Verizon Wireless in a deal that is being reported to be worth around USD130 billion.
Verizon has been wanting to buy the stake for years, and there has been persistent speculation that Vodafone would sell, if the price was good enough.
Citing people familiar with the matter, Bloomberg News reported that Verizon is working with several banks to raise $10 billion from each, or enough to finance about $60 billion of the buyout. The rest is expected to be in the form of shares in Verizon, which could also help avoid a hefty tax bill that Vodafone would otherwise face from the sale.
A deal could be announced as soon as next week.
In a short statement, Vodafone said that it "notes the recent press speculation and confirms that it is in discussions with Verizon Communications regarding the possible disposal of Vodafone's US group whose principal asset is its 45% interest in Verizon Wireless."
Vodafone's 45% stake in Verizon Wireless has usually been valued at around USD100 billion, but it has been generally accepted that Vodafone shareholders are unlikely to support a sale at face value, and would probably need an offer of around USD130 billion from Verizon.
Verizon is also expected to sell back to Vodafone its 23 percent stake in Vodafone Italia, which could be worth around USD5.3 billion. That would give Vodafone full ownership of the Italian subsidiary.
The formation of Verizon Wireless is the result of a bout of deal making by Vodafone's founding CEO, Chris Gent who won the battle to buy USA based CDMA network, Airtouch Communications in the USA back in January 1999 - beating Bell Atlantic to the prize.
As a result of losing the battle for Airtouch, Bell Atlantic terminated its PrimeCo joint venture with Airtouch, leaving the company with a network that was limited to the Western side of the USA, while Bell retained its Eastern network. Despite this break down in relations, only a few months later, Gent was talking to Bell Atlantic about the creation of a nationwide CDMA network operator, and in late September, the two companies announced the formation of Verizon Wireless.
Vodafone took a 45% stake in the even larger company, while Bell Atlantic, later renamed Verizon Communications took the controlling 55% stake in the mobile network.