Verizon (NYSE: VZ) in discussions with Vodafone to sell out U.S. venture

Verizon in discussions with Vodafone to sell out U.S. ventureVodafone Group PLC is reportedly in discussions with Verizon Communications Inc. to sell its stake in Verizon. This would be considered the third largest deal of all time. Verizon is the top U.S. mobile carrier.

Verizon wants full ownership

Verizon has said it would like to gain full ownership of its network. The network is growing rapidly and generates billions of dollars in free cash flow, according to reports. Vodafone’s Chief Executive Vittorio Colao has been biding his time, waiting for the best time to sell the 45 percent stake in the mobile carrier.

Vodafone is second largest carrier

Vodaphone is the world’s second largest mobile carrier and has assets in Europe, India, Turkey and Africa as well. Bloomberg has reported that Verizon could pay $130 billion, and the company is reportedly working with banks to raise money to finance $60 billion of the total deal. The sources have said a formal announcement could come as soon as Sept. 2.

Verizon became interested in April

In April Reuters reported that Verizon had hired advisers to bid $100 billion for the stake. Analysts had said that bid would be too low, as Vodafone’s holding was near $120 billion. In a statement from Vodafone, it indicated its shares were up 9 percent to a 12-year high of 207 pence as investors and analysts said a deal could finally come to exist. Vodafone’s credit default swaps, which measure the company’s cost of defaulting on its debts, fell 6 basis points to 70 basis points.

Verizon shares are up

Shares in Verizon Communications (NYSE: VZ) jumped 4.2 percent in pre-market trading in New York on Thursday. Both companies have a cross holding in Vodafone Italy, Bloomberg reported sources told them. The only deal bigger was in 1999 when Vodafone paid $203 billion to take over Germany’s Mannesmann. That was followed by AOL’s $165 billion purchase of Time Warner in 2000.

Shortly after 9 a.m. on Thursday, Verizon stock showed pre-market values of $48.75, which was up 4.70 percent or $2.19 over the previous day’s value of $46.56. The company’s stock reached its 13-year high in April, which some indicate gave it more flexibility and finances so it could make the bid on the Vodafone interest. Many believe stocks will soar if Verizon can indeed close on the deal with Vodafone.

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About the author

Drew is a regular contributor covering trending topics.