Yes, the deal rumor of the year that teases us every month or two is back this morning. Verizon and Vodafone could again be doing a deal for the 45% of Verizon Wireless that Vodafone owns and Verizon wants. This time, however, there are at least a few actual signs that a deal could actually be within range.
Vodafone has in fact confirmed that talks are actively underway, which is a significant escalation of the usual ‘sure we would talk about it if the price make sense’ we have been getting. Meanwhile, Verizon is rumored to be in the market to sell $60B in debt in $10B increments, possibly looking to take advantage of the window in the credit markets. No word on how they’d handle the other half or so, but
Previous analysis, such as it is, had put Verizon’s bid at about $100B and Vodafone’s ask at $130B, the difference of which is bigger than most deals themselves. It’s not clear what’s changed, but it could be a combination of lower cost of capital for Verizon and a better appreciation on Vodafone’s part for the M&A possibilities elsewhere that might be pursued if they were flush with cash.
So let’s say they split the difference on the high side and call it $120B, conveniently double what Verizon is supposedly raising. Vodafone shareholders would want a big chunk of that paid out in a nice special dividend of course, but even a fraction of such a sum would go a long way right now in Europe. A long, long way.
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