The UK newspaper, The Telegraph has reported that Vodafone is preparing a counter-bid for AT&T Wireless, offering a knockout price of around US$40 billion for the company.
"I don't think we'll decide till the last possible moment," said one unnamed director. "I would say the odds are 55 per cent in favour of us going ahead."
The paper said that the decision to press the button on this huge cash bid depends entirely on whether Vodafone's board is persuaded later this week that the financial case for the takeover is strong enough to reassure the company's largely sceptical shareholders.
Vodafone is expected to be forced to sell its 45% stake in Verizon Wireless, and could earn as much as US$25 billion for the stake, significantly reducing the net cost of acquiring AT&T Wireless. If Vodafone is unable to find a buyer, then it does have a put option that would force Verizon to buy out the stake over a two year period for US$20 billion. However, The Times newspaper has reported that selling the stake could produce a taxable gain of more than US$15 billion and a tax liability of more than US$6 billion.
"This is not a cheap buy, whichever way you look at it," said a director. "I don't think we are going to be able to prove that it will enhance earnings in the short term. But that's the wrong way of analysing it. The fact is that assets like these do not become available every day. And it's crazy that Vodafone has so little presence in the US."
Vodafone's shares have fallen more than 6% in the last month since the prospect of a bid battle for AT&T Wireless emerged."
Posted to the site on 9th February 2004
Posted to: www.cellular-news.com/story/10572.php