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Verizon denies bid with AT&T to take over Vodafone

Reports claimed the two US telcos would mount joint bid for UK giant, with AT&T taking the non-US assets


Published: 3 April, 2013

READ MORE: M&A | US | Verizon Communications

Verizon has denied yesterday's reports that it was not only planning to bid for Vodafone Group, but that it might work with AT&T to do so.

The almost mind-boggling scenario gained significant attention among market watchers on Tuesday, pushing Verizon Communications to issue a statement of denial (which, significantly, was distributed by Vodafone). It said: "As Verizon has said many times, it would be a willing purchaser of the 45% stake that Vodafone holds in Verizon Wireless. It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others."

Verizon has made no secret of its wish eventually to gain full control of the Verizon Wireless joint venture with Vodafone, its chief cash and profit generator. That has led to various other options apparently being discussed, including full merger of Verizon and Vodafone. This week's latest twist was that AT&T might be part of the story too, talk which surfaced from "reliable sources" of the Financial Times newspaper.

Vodafone's shares fell by as much as 3.7% on the statement that Verizon was not considering a bid., having leapt by as much as 6.1% on the FT's report. That said the two largest US telcos had been working on a break-up bid for the UK-based giant and could offer as much as 260 pence ($3.93) per share.

Under this plan, apparently Verizon would gain full control of Verizon Wireless while its rival would gain Vodafone assets in Europe and elsewhere. AT&T wireless chief Ralph de la Vega said in an interview in February that the operator was looking at international expansion opportunities, with India said to be one target - Vodafone has majority control of a major cellco in India.

However, Sanford Bernstein analyst Robin Bienenstock said in a client note: "We view Vodafone as a very reluctant seller", and assumed Verizon had seen its interest in the UK firm rebuffed. Bloomberg reported last month that Verizon had considered full merger with Vodafone as recently as December, but talks broke down over disagreements over leadership and headquarters location.

Vodafone's 45% stake in Verizon Wireless may still be in play and analysts believe it would be worth about $115bn. In accordance with UK rules, Verizon said in the statement that it reserves the right to make or join in an offer for Vodafone within six months of the announcement that it is not interested, provided it has the agreement of Vodafone directors, a third party makes a bid, a whitewash or reverse takeover proposal from Vodafone, or a material change in circumstances occurs.

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