For years, Verizon and Vodafone have confronted a problem: what to do with Verizon Wireless, which they both own nearly equally
According to a new report, the answer may be simple: Bring in Verizon’s top competitor.
The Financial Times’ Alphaville blog said on Tuesday that Verizon and AT&T are teaming up to buy all of Vodafone.
That would give the British telecom giant what the blog reckoned was a $245 billion enterprise value and would be one of the biggest takeovers in at least a decade.
The plan outlined by Alphaville â€" Verizon buying out Vodafone’s 45 percent stake, while AT&T buys the rest of the British telecom â€" could solve the many issues that Verizon and Vodafone have been trying to figure out for years. And it would solve issues that both American companies face.
Verizon has long wanted to take control of the profitable business. And Vodafone has sought to sell the 45 percent stake it owns â€" but at an acceptably high premium and without being hit by an enormous tax burden.
Every year like clockwork, speculation has arisen that Verizon and Vodafone have had talks about striking a deal over Verizon Wireless. And every year so far, nothing has come up.
Last month, Bloomberg News reported that the two had again held talks, with Verizon remaining quite eager to take control of the wireless business.
But bringing in the company’s biggest rival could help out. AT&T hasn’t pursued a big deal since the failure of its $39 billion bid for T-Mobile two years ago, and still has plenty of financial firepower, with nearly $5 billion in cash and short-term debt on its balance sheet.
Verizon itself has about $3.6 billion. And both American telecoms have healthy balance sheets that could support the additional debt needed to finance a major deal.
Despite the collapse of the T-Mobile deal, AT&T has still sought to grow. With American antitrust regulators unlikely to let the telecom giant buy anything of scale at home, the company has turned its eyes abroad for possible opportunities.
Vodafone shareholders seem to like the idea: Shares of the company jumped 5 percent on the London Stock Exchange on Tuesday, reaching 196 pence by midday.
