Vodafone ‘agrees to sell’ stake to Verizon

AFP-Jiji, AP

British telecommunications giant Vodafone has agreed to sell its U.S. wireless joint-venture stake to partner Verizon in a $130 billion deal that would be the second-largest on record, newspapers reported Sunday.

Vodafone confirmed it was in advanced talks with Verizon Communications “regarding the disposal of Vodafone’s U.S. group” but played down reports that the deal was complete.

A company statement warned there was “no certainty that an agreement will be reached” but said an additional announcement would be made “as soon as practicable.”

The buyout would be second only to Vodafone’s $172 billion acquisition of Mannesmann AG in 2000, according to research firm Dealogic.

Verizon’s board of directors was to meet on Monday to finalize the terms of the agreement, which would see Vodafone sell its 45 percent stake in Verizon Wireless, giving the U.S. fixed-line company full control after 13 years of shared ownership, the Financial Times reported.

The daily added that Vodafone’s board had already met Sunday to OK the deal, which the company said would “substantially comprise a mixture of Verizon common stock and cash.”

The Guardian reported that the split between shares and cash would be roughly 50-50.

The Wall Street Journal called it the second-most-important acquisition of all time, after Vodafone’s takeover of Mannesmann.

The U.S. daily claimed that the new deal would be announced “Monday afternoon,” quoting a person close to the negotiations.

Created in 2000, Verizon Wireless operates more than 100 million lines and employs 73,4000 staff members. Headquartered in Basking Ridge, New Jersey, the company generated revenues of $75.9 billion in 2012.

Verizon has been looking to take full control of the joint venture for many years, but negotiations have floundered on the sale price, with the U.S. company hoping to pay around $100 billion for Vodafone’s stake.

The deal is likely to be structured so that Vodafone is shielded from a hefty tax hit. Vodafone would get a tax bill worth an estimated $40 billion, Morningstar analyst Allan Nichols said. “But there are some ways around, and under $10 billion would be more likely,” he said.