*from www.bloomberg.com, Mar. 6, 2013 (To view original article click here.)
Take Away #1: Verizon Communications Inc. (VZ) could be on a path to full ownership of Verizon Wireless, with a potential buyout of Vodafone (VOD)’s stake in their joint venture.
Key Facts and Figures:
- Verizon Wireless is the most profitable and fastest-growing major wireless carrier in the U.S.
- Verizon Communications Inc. and Vodafone have discussed a range of options including the idea of Verizon acquiring 100% of their U.S. wireless partnership.
- Vodafone’s 45% stake in Verizon Wireless could fetch $115 billion.
- Vodafone jumped as much as 7.6%, its steepest gain in four years, adding more than $9 billion in market value.
Take Away #2: Verizon is eager to take over Verizon Wireless, which would give the company greater control over its most profitable division.
Key Facts and Figures:
- Verizon Wireless added a record, 2.1 million subscribers last quarter, eclipsing the growth of AT&T Inc. (T) and other rivals.
- Verizon Wireless generated an earnings margin of more than 41%.
- “Verizon wants to control what is genuinely the best telecom asset on the planet,” said Jonathan Chaplin, New Street Research analyst.
Take Away #3: Verizon and Vodafone may be restarting talks of a potential merger.
Key Facts and Figures:
- Verizon and Vodafone have discussed a full merger of the two companies on and off every few months for at least two years and as recently as December.
- Talks picked up last year driven by support from large shareholders and gained steam as Verizon’s market value came in line with Vodafone’s, allowing both sides to portray the deal as a merger of equals.
- Past negotiations of a merger broke down over disagreements on the combined company leadership and headquarters location, making a buyout or partial sale of Vodafone’s stake likelier.
- No formal discussions of a merger are currently underway, and deliberations over the sale of Vodafone’s stake in Verizon Wireless have not progressed to substantial negotiations yet.
- The talks are likely to restart again this year.
Take Away #4: For Vodafone the sale would be in line with CEO Vittorio Colao’s efforts to sell stakes in operators that the company doesn’t fully control.
Key Facts and Figures:
- In 2011, Vodafone shed its holdings in SFR, the second-biggest French mobile-phone operator.
- Vodafone has also pared back ownership in Asian and Polish holdings.
- Newbury, England based Vodafone, has explored using the proceeds from a deal to make its own acquisitions in Europe.
- The company has held internal discussions about a possible bid for Germany’s Kabel Deutschland Holding AG (KD8).
Take Away #5: The sale of Vodafone’s stake could be in the best longstanding interest of the company.
Key Facts and Figures:
- People have been skeptical about Vodafone given the weak general telecoms market as well as the drawn out process of the Verizon deal.
- However, “It finally looks like a good solution in the making, and this would certainly be a good price,” says Peter Braendle, fund manager at Swisscanto Asset Management.
- Vodafone (VOD) rose to 6.3% to 179.25 pence at 10:08 a.m. in New York.
- Verizon fell less than 1% to $47.38, but has risen for 12 straight days prior to today, the longest stretch since 1985.
Take Away #6: A stake sale, bringing an end to the joint venture, would be a win for both sides.
Key Facts and Figures:
- A Verizon buyout of Verizon Wireless would mark the end of a joint venture that began in 1999 between then Bell Atlantic Corp. and Vodafone’s mobile units.
- Verizon could use the cash Verizon Wireless generates to help sustain its shareholder dividend.
- Vodafone would likely receive well over $100 billion for its stake in Verizon Wireless.
- Verizon could finance the transaction with existing cash and new debt.
- Verizon could also include stock in the purchase to reduce the tax burden for Vodafone and allow it avoid a capital gains tax.
- The alternative to a stake sale — a full merger – could mean one of the biggest takeovers in history.
- Verizon has a market value topping $136 billion, while Vodafone’s is almost $133 billion after today’s increase.
Key Facts and Figures:
*To view original article from www.bloomberg.com click here.