Vodafone sticking to Verizon stake as talk of takeover is quelled
Thursday 04 April 2013
Vodafone has insisted that it is happy to retain its 45 per cent shareholding in its American joint venture, Verizon Wireless, and that shareholders in the British mobile giant should be patient about its future.
Speculation about Vodafone's relationship with Verizon, its partner in Verizon Wireless, has been raging for weeks. One report earlier this week claimed that Verizon could even be ready to launch a takeover bid for Vodafone.
But the US mobile firm yesterday slapped that down, declaring it did not "currently have any intention to merge with or make an offer for Vodafone".
Shares in Vodafone fell 3 per cent yesterday, down 5.85p to 186.15p, after that formal denial from Verizon.
Rumours about a possible takeover had seen traders chase up the FTSE 100 stalwart to a 12 month high of 198p earlier this week.
Although Verizon dismissed the idea of buying Vodafone, the US company reiterated that it is still interested in buying Vodafone's 45 per cent stake in their joint venture.
Analysts have estimated that could be worth as much as £70bn. But many analysts remain doubtful that a deal could happen soon as Vodafone and Verizon have an awkward relationship. It took years before Verizon first agreed to pay Vodafone a dividend two years ago.
The broker Oriel Securities said it was "very sceptical" because valuation is a major stumbling block.
Vodafone is also thought to gain major tax benefits at present by being able to offset profits from Verizon Wireless against historic tax losses.
In contrast, Vodafone would face a big tax bill if it sold Verizon Wireless because its value has soared.
A source close to Vodafone said that shareholders "should understand the power of the status quo" and there was no pressure on the company to change its shareholding, adding the 45 per cent Verizon Wireless stake is "a nice problem to have".
Vodafone's chief executive Vittorio Colao had come under pressure from activist investors to sell its stake in Verizon Wireless in 2010 but he believes that his decision to hang on to it has been vindicated.
Verizon is America's biggest mobile operator.
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