Verizon Vodafone Takeover Reports Denied

Shares in Vodafone have tumbled after Verizon Communications denied speculation it was preparing to launch a takeover bid for the UK operator.

Verizon had been linked with a takeover after Vodafone appeared unwilling to sell its 45 percent stake in the two companies’ US mobile joint venture, Verizon Wireless, in a $115 billion deal as it would most likely result in a capital gains tax bill in the region of $20 billion.

It had been suggested Verizon was preparing a bid with rival AT&T, with the former taking full control of Verizon Wireless and the latter receiving all of the company’s non-US assets. Such a move would confirm reports AT&T is looking to acquire a European operator. It has previously been linked with EE in the UK and KPN in the Netherlands.

Verizon Vodafone takeover

It is believed Vodafone and Verizon have been engaged in high level talks regarding a number of options, but that the two sides would struggle to agree a price.

In a statement, Verizon said it had no intention to acquire or merge with Vodafone, but reiterated its desire to purchase Vodafone’s interest in Verizon Wireless in a move widely seen as an attempt to tell Vodafone shareholders that it was management holding up the sale of any deal.

Vodafone has previously employed a strategy of holding minority stakes in overseas operators until it was in a position to strengthen its position. This has worked well in places like South Africa, but it has faced stalemates in a number of territories, causing investors to place pressure on the company to relinquish such holdings.

It has since retreated from a number of markets, including France, China and Japan and split its European unit into two units.

Unless a deal can be struck in the US, Vodafone will be stuck with a minority stake in the joint-venture, while Verizon will be unable to gain full control. However analysts have said that speculation about a future sale of the shares will persist, meaning that shares in Vodafone will not fall much further.

In its most recent results, Vodafone reported a worse than expected 2.6 percent decline in revenue during the fourth quarter of 2012 as income from Northern Europe decreased.

What do you know about tech stocks and shares? Try our quiz!