Are Vodafone Group plc (LON:VOD) and Verizon Communications set for the biggest corporate merger in history?
Shares in Vodafone (LSE: VOD) (NASDAQ: VOD.US) leaped 6.1%, or 10.30p, to reach 178.90p in early trade this morning, following news from across the pond that Verizon Communications (NYSE: VZ.US) is mulling over its options regarding its relationship with the UK-based telecommunication group -- which could lead either to the US company buying out Vodafone's stake in Verizon Wireless, or a tie-up between the two.
Reports from Bloomberg state that representatives from the two Goliaths met as recently as December, at which the option of a full merger was discussed. With Vodafone valued at £83bn and Verizon at £90bn, a combination of the two would form history's biggest corporate merger.
However, it is believed that talks stalled mainly over leadership and the location of a new company, which means that a buyout or partial sale of Vodafone's stake in Verizon Wireless is more likely, according to sources. Additionally, a merger would bring with it outside scrutiny concerning a potential adverse impact on competition.
Verizon's interest in gaining full control of the Verizon Wireless operation is understandable, as it is its most profitable division. Vodafone's current 45% share is thought to be valued at around $115bn, which would inject a considerable cash pile into its coffers should a deal be reached. Discussions are set to resume this year.
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> Sam owns shares in Vodafone. The Motley Fool has recommended shares in Vodafone.