AT&T (T) Could Play Key Role in Verizon (VZ), Vodafone (VOD) Deal - BAML

March 15, 2013 10:00 AM EDT
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Price: $52.72 +0.69%

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    Up: 30 | Down: 30 | New: 23
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Buying a $140 billion company is a formidable challenge that doesn't come without a lot of speed bumps. That is, unless you have help doing it.

According to BofA/Merrill Lynch (BAML) analyst David Barden, Verizon (NYSE: VZ) might have just that sort of help from AT&T (NYSE: T) as it mulls a potential takeover of Vodafone (Nasdaq: VOD).

Barden thinks AT&T could buy Vodafone's non-U.S. assets, paving the way for a deal to happen. He notes that Verizon isn't worried about Vodafone's U.S. assets and wouldn't likely make a bid for the whole company. AT&T might be able to pick up the non-U.S. assets for about $70 billion.

The deal could turn out to be a three-way winner: AT&T would gain "global scale" with th deal being accretive to cash flow, Verizon would get full control of Verizon Wireless, and Vodafone would garner a "long-elusive" premium for its asset portfolio.

AT&T would likely jump at the chance, too. The WSJ reported in January that AT&T was looking to make a big deal in the country. Names like BT Group (NYSE: BT), France Telecom (NYSE: FTE), Telefonica S.A. (NYSE: TEF), Royal KPN (OTCBB: KKPNY), Deutsche Telekom (OTCBB: DTEGY), popped up.

BAML is keeping Verizon at Neutral, but boosts its price target from $45 to $50. Verizon, Vodafone, and AT&T are all lower on the session Friday.

For an analyst ratings summary and ratings history on Verizon Communications click here. For more ratings news on Verizon Communications click here.

Shares of Verizon Communications closed at $48.48 yesterday.

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