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Verizon (VZ), Vodafone (VOD) Miles Apart on Price for Wireless Venture Stake

April 26, 2013 9:59 AM EDT Send to a Friend
Verizon (NYSE: VZ) has been mulling the purchase of Vodafone's (Nasdaq: VOD) in the Verizon Wireless joint venture and Vodafone has been relatively receptive. One point that the two side differ on, is price.

According to reports out Friday, Verizon could bid about $100 billion for Vodafones' 45 percent stake in the joint venture, while valuations peg Vodafone's share at around $130 billion.

Verizon CEO Lowell McAdam said the telecom giant had the wherewithal to acquire Vodafone's share, while CFO Fran Shammo commented during last week's quarterly conference call that Verizon has come up with a way to acquire the stake without Vodafone needing to take a large tax hit. Vodafone execs have contended in the past that an outright sale would saddle the company with a $10 billion tax bill. Veizon, for its part, has disagreed with Vodafone's assessment, recently appealing directly to shareholders for CEO Vittorio Colao to begin discussions.

Though no formal offer or discussions have taken place, Verizon has been looking to acquire the stake for the last 10 years or so. A potential deal in 2011 was scrubbed as both sides failed to reach an agreement on price.

Verizon might make a deal with a combination of stock, debt, and cash, or simply buy the Verizon Wireless stake one piece at a time.

Vodafone would look at a deal as giving up its best asset, thereby becoming more exposed to the shaky European economy. Not exactly a shareholder friendly undertaking at this point.

Whether a deal gets done sooner than later might already be worked into the stocks; Verizon is up about 27 percent in 2013, while Vodafone is up 22 percent for the same period.

Both Verizon and Vodafone shares are up on the session Friday.




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