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Vodafone says it's not bidding for Verizon

July 17, 2007|From Reuters

Vodafone Group said Monday that it was not planning to bid for Verizon Communications Inc., responding to a report that it was considering a $160-billion offer.

The Financial Times' FT Alphaville blog said the British wireless telecom company was considering such a bid -- which would consolidate ownership of their wireless joint venture -- prompting Verizon's shares to jump 12% in pre-market trading.

The stock gave up most of the gain after Vodafone's denial, and closed up $1 at $42.76. Vodafone's New York-traded shares trimmed earlier losses to close down 1.1%.

"Vodafone wishes to make it clear that it has no plans to make such an offer," the company said in a brief statement. Verizon officials declined to comment.

FT Alphaville, citing unnamed sources, said Vodafone had not yet approached New York-based Verizon with an acquisition plan and there was no certainty a bid would be pursued.

A $160-billion bid would be a 32% premium to Verizon's market capitalization of about $121 billion at Friday's close.

Vodafone and Verizon jointly own Verizon Wireless, the second-largest U.S. mobile service provider in terms of subscriber base behind AT&T Inc.

Verizon has a controlling 55% stake in the wireless venture and Vodafone holds the rest.

The FT Alphaville report surprised investors, who had expected Verizon to be the buyer in any deal for Verizon Wireless. Verizon has said it was interested in taking full ownership.

"It would make more sense. They [Verizon] could then spin off the non-U.S. assets [of Vodafone]," said Richard Marwood, a fund manager in AXA Investments, which owns Vodafone shares.

The report comes ahead of an August expiration of a put option, a mechanism that would allow Vodafone to sell some of its stake in Verizon Wireless.

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