Earlier today rumors were circulating that Verizon Wireless is currently in talks with Britain’s Vodafone to buy back the latter’s 45 percent stake in the largest U.S. carrier. Vodafone has now confirmed that talks are indeed underway, adding that there’s “no certainty” that both parties will reach an agreement. Analysts expect that if a deal is reached, it may be worth up to $125 billion, making it one of the biggest deals to take place worldwide in the last decade, second only to Vodafone’s acquisition of German carrier Mannesmann in 2000 for which it paid $181 billion.
So what would Vodafone do with this massive cash influx? Analysts believe that it may be put towards strengthening Vodafone’s core European operations, which have struggled due to the precarious situation of the economy in Europe. Vodafone’s investors are also likely to benefit through share buybacks. One major hurdle that might get in the way of a deal is the hefty tax bill that Vodafone will have to pay if it dispenses with it’s stake in Verizon Wireless. Though Verizon has already said that it is capable of structuring any potential transaction that can limit Vodafone’s tax liabilities. Citing a source with knowledge of the matter, The New York Times reports that a prospective deal might be announced as soon as early next week.
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