The shares of Vodafone (LSE: VOD) (NASDAQ: VOD.US) rallied 8p, or 4%, to 215p during early trade this morning after the telecom group confirmed talks about the sale of its 45% stake in Verizon Wireless had involved a $130bn valuation.
The FTSE 100 member also revealed that it remained in “advanced” discussions with Verizon Communications regarding the disposal.
A $130bn sale, which Vodafone said would be funded by a mixture of Verizon stock and cash if the deal went ahead, would be equivalent to about £83bn or 172p per share.
Early reports from Reuters suggested the proceeds would be split $60bn in Verizon stock, $60bn in cash and an additional $10bn through “smaller transactions“. The news agency also speculated a full announcement may come this evening after the Verizon board met to vote on the purchase.
The transaction is set to be the third-largest in corporate history, following Vodafone’s $183bn purchase of Mannesmann and AOL’s purchase of Time Warner for $164bn, both of which occurred during the dotcom bubble of 2000.
The Daily Telegraph today claimed MPs would be watching the Verizon transaction “carefully” after reports suggested that part of the deal’s viability stemmed from “a structure enabling tax liabilities to be reduced from as much as $40bn to just $5bn.“
The Telegraph also speculated as much as 70% of the $130bn could be returned to ordinary Vodafone shareholders via a special dividend.
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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended Vodafone.
