Verizon Communications Inc has hired advisers to prepare a possible US$100 billion cash and stock bid to take full control of Verizon Wireless from joint venture partner Vodafone Group PLC, two people familiar with the matter said on Wednesday.
Verizon, which already owns 55 percent of Verizon Wireless, has not put a proposal forward to Vodafone yet, but it has hired both banking and legal advisers for a possible bid, the sources said.
Verizon hopes to start discussions with Vodafone soon for a friendly deal, but is prepared to take a bid public if the British company does not engage in talks, one of the sources added.
There are no guarantees that Vodafone will be interested in a deal or that any bid will materialize, the sources said.
Over the past decade, Verizon has made little secret of its wish to buy out its British partner from the joint venture, which is the No. 1 US wireless carrier.
The sources said that Verizon now is ready to push aggressively for a deal.
Verizon, benefiting from record low interest rates as well as its own strong stock price, is confident that the company can raise about US$50 billion of bank financing, the sources said.
It plans to pay for the rest of the deal with its own shares, they added.
The sources asked not to be named because the discussions are confidential.
Verizon’s board is expected to discuss details of a potential Verizon Wireless buyout next week at a regularly scheduled meeting being held ahead of the company’s annual shareholder meeting, one of the sources said.
Verizon spokesman Bob Varettoni declined to comment, but pointed to the US telephone company’s statement earlier this month, in which it said it would be a willing buyer of Vodafone’s share of their Verizon Wireless venture.
Taking full ownership would give Verizon, which is reliant on the Verizon Wireless operations for growth, a lot more flexibility with the cash generated from the wireless business.
Verizon’s shares have risen about 20 percent so far this year as its wireless business has been easily outperforming its smaller colleagues in terms of profitability and customer growth, and amid rising hopes that it will purchase the rest of Verizon Wireless.
Investors say the conditions for a deal have improved because of Verizon’s strong results, its share price gains and low interest rates.
Any deal that includes such a large stock component may, though, mean dilution for Verizon Communications shareholders.
So far this year, Vodafone’s shares have risen about 23 percent after lagging in the final few months of last year.
The recent gains have been attributed by analysts to hopes that it will sell the stake to Verizon.