Vodafone-Verizon: a $245 billion solution

According to usually reliable people, Verizon Communications and AT&T have been working on putting together a breakup bid for Vodafone.

The bid would give Vodafone an enterprise value of around $245 billion. That would dwarf the previous M&A record holder, AOL’s $182 billion takeover of Time Warner in 2000. Barclays US has been tasked with putting together the potential transaction, the usually reliable people claim. The basic idea would be that Verizon buys Vodafone’s 45 percent stake in their Verizon Wireless joint venture while AT&T takes the non-US assets. For Vodafone, a takeover would achieve a premium for its Verizon Wireless stake without having to leak around $20 billion in tax (or suffer the bad publicity of trying to avoid it). For Verizon, bidding would clean up its structure without getting embroiled in the fights about leadership and domicile that were said to have stalled Vodafone merger talks in December. AT&T, meanwhile, would fulfill the long-stated ambition of expanding in Europe. Splitting the takeover premium would also make a deal much more palatable both for shareholders and debt ratings agencies.