Vodafone confirms talks with Verizon over 45% stake in US business

29 August 2013 | Kavit Majithia

Vodafone is in talks with Verizon Communications over the sale of its 45% stake in US telecoms group Verizon Wireless.

The deal, which has been rumoured for months, could prove to be one of the largest M&A deals ever, with the stake valued at over $100 billion.

According to the Financial Times, Verizon has recently been putting increasing pressure on Vodafone to exit the US, but talks in the past have fallen flat because of differing valuations of the 45% stake.

Vodafone said this morning that "there is no certainty that an agreement will be reached".

Any sale could be seen as a huge loss to the UK-based group’s overall portfolio, with Verizon paying Vodafone billions of dollars in dividends on a yearly basis.

Verizon has been increasingly open, particularly this year, in its desire to take full ownership of the company.

Goldman Sachs analysts valued the stake at $115 billion this year, post tax, but the tax bill due on such a large transaction could be a major problem.

Analysts believe Verizon could avoid the bill by buying out Vodafone American Holdings, a unit set up by the UK operator when the company bought US wireless carrier AirTouch in 1999.

This holding company also holds Vodafone’s Verizon Wireless stake, and it is thought the US behemoth could save up to $35 billion in taxes by taking this approach.

Verizon, with its 55% stake, has further claimed it could be a lean year for paying out dividends to Vodafone through the subsidiary.

Vodafone CEO Vittorio Colao has claimed in the past that he will sell the stake in Verizon Wireless at the right time and at the right price.

Topics: Vodafone, Verizon, M&A, 45%, tax, Vittorio Colao