Friday, April 19, 2013

Scared - Verizon, Vodafone

Few things scare me more than Vodafone management selling their one good asset (the stake in Verizon wireless) to waste in their usual manner (see Australia). By far the best asset owned by Vodafone is the one asset they do not manage - and there is a (management) reason for this.

But there was an a quote in yesterday's Verizon conference call that was somewhat contrary to my prior opinion...
With respect to Vodafone, obviously, we made a public announcement on April 2, and I would reference all of you back to that announcement. Of course, as we've always said before, we are very interested in acquiring the 45% stake in Verizon Wireless that we don't already own. I will say, though, that there has been a lot of speculation about the tax consequences of a purchase of this 45%, and we are extremely confident that such a transaction could be accomplished in a manner that is very tax-efficient and would not result in a tax on the gain in that stake. So beyond that, I don't think there is really much else to say. So with that, I will pass it on to the next question.
I am worried that Vodafone will take the money. Very worried.



John

2 comments:

Robert in Chicago said...

It is worse than that. The tax-efficient structure may be to pay VOD with VZ stock (which is very overvalued relative to VOD). Then VOD could be the one to crush the VZ price by creating the world's biggest overhang -- _after_ the exchange ratio has been set.

Anonymous said...

Any reason VZ wouldn't just buy the whole thing using overvalued stock? VOD mgmt has done such an amazing job lowering expectations for the rest of the business, the only way is up for any successor.

Thoughts?

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.