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AT&T And Verizon Break Up Bid For Vodafone?

Steven Dotsch profile picture
Steven Dotsch
101 Followers

Vodafone (NASDAQ:VOD), the world's second largest mobile operator, has been at the centre of much speculation in recent months with regards to its ownership of its 45 percent stake in U.S. mobile operator Verizon Wireless.

Commentators have suggested that Vodafone could sell its stake to joint venture partner Verizon Communications (VZ), or sell itself to the U.S. group to avoid a costly tax bill. A third scenario has now emerged that would enable AT&T (T) to enter the European market, while Verizon would secure the rest of Verizon Wireless.

Break-up bid for Vodafone?

Verizon Communications and AT&T have reportedly been working on a $245bn breakup bid for Vodafone whereby Verizon would buy Vodafone's 45 per cent stake in their Verizon Wireless joint venture and AT&T would obtain Vodafone's non U.S. assets.

"Usually reliable people" have told the FT that Verizon and AT&T would offer $3.95 (260 pence) a share in what would be the biggest takeover in history.

According to the FT a three-way deal would benefit all:

"For Vodafone, a takeover would achieve a premium for its Verizon Wireless stake without having to leak around $20bn in tax (or suffer the bad publicity of trying to avoid it)".

"For Verizon, bidding would clean up its structure without getting embroiled in the fights about leadership and domicile that were said to have stalled Vodafone merger talks in December".

"AT&T, meanwhile, would fulfill the long-stated ambition of expanding in Europe. Splitting the takeover premium would also make a deal much more palatable both for shareholders and debt ratings agencies."

In Conclusion

At a mooted exit price of $3.95 (260 pence) per share we would be voting against the deal.

While we would be making a "great" return, having purchased Vodafone shares when they were historically undervalued in 2006, at $1.78 (117 pence), a possible bid of $3.95 (260 pence) per

This article was written by

Steven Dotsch profile picture
101 Followers
From a very young age, Steven learned the value of money and saving. He started saving money when he was only five, washing his father’s car and started to invest in Dutch shares when he was fourteen. Following university in Amsterdam, Steven pursued a career in merchant banking in The Netherlands. Since 1989, he has been living and working in London. Steven left the City in 1998 and since then, has been involved both as a founder as well as an early stage investor with a number of online and mobile telecoms ventures, including Ukonlineinvesting.com – a now defunct website which was aimed at longer term investors interested in making better informed investment decisions. In 2009, Steven started Early-Retirement-Investor.com, a website aimed at professionals and expats wanting to retire earlier and richer. In 2010, Steven launched Dividend Income Investor, to demonstrate the benefits of dividend income investing based on his own unique investment research approach, buying shares at historically undervalued levels. For more on Steven, click http://www.dividend-income-investor.com/about-steven-dotsch/

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