Financial News

  • 27 January 2014, 15:54

US Giant AT&T Downs Tools On Vodafone Offer

The US telecoms giant AT&T has said that it did not intend to lodge a takeover bid for Vodafone, just days after meeting European regulators to discuss the move.

In a statement issued at the request of the UK Takeover Panel, which regulates City mergers and acquisitions, AT&T said it was not planning to make an offer in the short term for the British mobile phone group.

Sky News revealed at the weekend that Randall Stephenson, AT&T's chairman and chief executive, had met the EU Telecoms Commissioner Neelie Kroes at the World Economic Forum in Davos to discuss his ambition to become a major player in the European market.

Insiders reiterated on Monday that Mr Stephenson and Ms Kroes discussed a number of issues including the Commission's receptiveness to a potential takeover bid for a major European operator such as Vodafone.

"AT&T Inc. notes the recent speculation regarding a potential transaction involving Vodafone Group Plc," the company said.

"At the request of the UK Takeover Panel, AT&T confirms that it does not intend to make an offer for Vodafone. Accordingly, AT&T is bound by the restrictions under Rule 2.8 of the UK Takeover Code."

"For the purposes of Rule 2.8 of the Code, AT&T reserves the right to announce or participate in an offer or possible offer for Vodafone and/or to take any other action which would otherwise be restricted under Rule 2.8 of the Code within 6 months after the date of this announcement in the circumstances described in note 2 to Rule 2.8 of the Code."

Under Takeover Panel rules, AT&T would be barred from bidding for Vodafone for six months without a material change of circumstances such as the emergence of a rival bidder.

A combination of AT&T and Vodafone, which has been speculated about for months, would create a global behemoth in the telecoms sector with a market value of well over 150bn (90bn).

The talks between Mr Stephenson and EU politicians came as Vodafone prepares to hand over a 54.3bn ($84bn) windfall to its shareholders from the sale of its stake in Verizon Wireless to Verizon Communications.

The majority of that sum will be in the form of Verizon stock and the remaining $24bn (14.5bn) in cash.

Vodafone and Verizon will both hold shareholder meetings next Tuesday to approve the $130bn (75bn) deal, which was the largest announced corporate transaction in the world last year.

AT&T has yet to make an approach to Vodafone but has been discussing options for financing what would be one of the world's biggest takeover deals in recent times.

Vodafone's sale of its Verizon Wireless stake is scheduled to complete on February 21. The UK company's shares will begin trading without the US mobile group's asset priced into them three days later, with investors receiving cash and shares on March 4.

Coincidentally, Mr Stephenson and Vittorio Colao, Vodafone's Italian chief executive, are both due to speak at the Mobile World Congress, a key industry conference, in Barcelona on February 24.

Mr Stephenson has spoken publicly of the 'huge opportunity' in Europe to exploit the growth of mobile broadband across the Continent.

Even after the Verizon Wireless deal closes, analysts expect Vodafone to be valued by the stock market at more than 50bn and possibly as high as 70bn, preserving its status in the ranks of the UK's ten biggest public companies.

Mr Colao has been examining strategic options for Vodafone's post-Verizon future, and he has already spent more than 6bn on the German cable company Kabel Deutschland.

He has also outlined plans for a 6bn network investment programme to take place over the next three years.

Reports have suggested that AT&T could pursue EE, the UK mobile group, as an alternative option to expand in Europe if a pursuit of Vodafone does not pay off.

Vodafone declined to comment on Monday.

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