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Verizon Communications (VZ) has reportedly hired bank and legal advisers ahead of a possible...

Verizon Communications (VZ) has reportedly hired bank and legal advisers ahead of a possible $100B cash and stock bid to buy Vodafone's (VOD +1.3% in London) 45% stake in Verizon Wireless. Verizon Com, which reckons it can raise $50B from banks to help fund the deal, will structure its offer so that Vodafone's tax bill would be $5B rather than a possible $20B.
Comments (11)
  • onlyapps
    , contributor
    Comments (71) | Send Message
     
    That's a lot of debt for a company that has large union employee pension obligations and received subsidies from the govt to ensure Fios expansion.
    25 Apr 2013, 07:16 AM Reply Like
  • VZkilledme
    , contributor
    Comment (1) | Send Message
     
    Don't worry about Verizon's pension "obligations." Verizon has already sucked dry the 21 earned pension plans for union and management employees alike. They did this in part by paying themselves (CEO, COO,CFO and other Executive Board members) huge bonuses for deals such as this. Also, the earned health care benefits of these retirees is nothing to worry about either. You, the taxpayer, will now be stuck with paying this debt. Verizon is a deadbeat corporation but they are in good company.
    26 Apr 2013, 11:11 AM Reply Like
  • doughave
    , contributor
    Comments (26) | Send Message
     
    I don't get why Sprint is worth only $21.5B. Sprint is the last real option to be into wireless.
    25 Apr 2013, 09:51 AM Reply Like
  • Ben Hanson
    , contributor
    Comments (403) | Send Message
     
    I'm thinking that Vodafone probably likes the status quo just fine, considering their core business is in the Eurozone.
    25 Apr 2013, 10:39 AM Reply Like
  • Esekla
    , contributor
    Comments (2295) | Send Message
     
    They certainly do, Darth. This sort of thing has come up many times over the years, but VOD needs the recurring income now more than ever: http://seekingalpha.co...
    25 Apr 2013, 11:07 AM Reply Like
  • Ray Merola
    , contributor
    Comments (3086) | Send Message
     
    Esekla

     

    Do you think the overtures are a bit more substantial this time? I don't recall this sort of VZ public announcement previously.

     

    My view is that for the right net price, anything is for sale. Whether a company monetizes their investment upfront or over time, it's a DCF calculation.

     

    Indeed, the Vodafone CEO also recently commented that maintenance of the current VOD dividend was not contingent upon a Verizon Wireless dividend.
    25 Apr 2013, 11:41 AM Reply Like
  • Esekla
    , contributor
    Comments (2295) | Send Message
     
    Yes Ray, I think Verizon sees the troubles in Europe and thinks, just maybe, they can finally manage this. Either that, or there is a more nefarious hidden agenda for pumping up VOD. Either way, everyone's evidence seems to focus on Verizon's desire and how the deal could get done, rather than why Vodafone would want to do it. , A deal just doesn't make sense for them. Sure, anything can get done at the right price, but I don't think there is a price that's even close to right for both parties.

     

    What the CFO actually said is, "The amount of cash we generate at the moment is a little higher than the dividend that we pay out." A little higher, at the moment, is not at all what you want to hear given the troubles in Europe and India. It's kind of like saying, "that speeding traffic isn't even brushing my clothing yet", it does not actually describe a situation that should be worry-free.
    25 Apr 2013, 12:18 PM Reply Like
  • canaday
    , contributor
    Comments (9) | Send Message
     
    Wasn't there a comment by a VOD executive this week that they could cover their dividend quite adequately without the VW distribution? Isn't VOD using most of the distributions to buy back shares anyway? I know that that sounds stupid to most investors who seem to like stocks where the cash goes to the executives in one form or another. As a longtime and quite happy VOD sharholder, I am more pleased with the status quo. VOD is selling at a lower p/e so maybe VZ would like to do a takeover. After all, VOD is only the worlds largest (or second largest depending on how you count China Mobile)
    25 Apr 2013, 01:19 PM Reply Like
  • Arthurx9
    , contributor
    Comments (4) | Send Message
     
    I can't see this happening too easily. $100bn is too low, Vofafone's shareholders will probably be looking for $130bn i.e.the takeover premium necessary will probably too high to make this work. Furthermore, would existing Vod shareholders want (part) Verizon paper? The acid test is - could Verizon encourage its existing shareholders to stump up for a rights issue so that (with £50bn of debt) the offer could be all cash? I very much doubt it. So why should Vod shareholders want to take Verizon paper?
    25 Apr 2013, 01:00 PM Reply Like
  • canaday
    , contributor
    Comments (9) | Send Message
     
    I looked at T, VZ, VOD, American Tower, and China Mobile when I needed to put a telecom in my portfolio. No, this longtime VOD shareholder does not want VZ paper. My dividends are flowing just fine, thank you. Obviously at the right price anything is for sale. But VOD is going to be no bargain with so many staunch VOD shareholders who are quite happy with their current situation. I think the problem will be with VZ shareholders who will not want to pay the price needed to buy.
    25 Apr 2013, 01:27 PM Reply Like
  • sl100
    , contributor
    Comments (110) | Send Message
     
    Vz already has 60B debt what's another 50B debt and another 50B dilution going to matter. How about 25B goodwill and another 20B pension liability.
    The Feds messed thus up again
    30 Apr 2013, 07:27 PM Reply Like
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