U.K.'s Vodafone Offers More Than $45 Billion for AirTouch, WSJ Reports
Vodafone Bids More Than $45 Bln for AirTouch: WSJ (Update2)
(Adds analyst's comments, detail from 4th paragraph.)
London, Jan. 5 (Bloomberg) -- Vodafone Group Plc, the
U.K.'s largest mobile phone service company, offered more than
$45 billion for AirTouch Communications Inc., the world's
largest, to top a rival bid from the U.S.'s Bell Atlantic Corp.,
the Wall Street Journal Interactive Edition reported.
Mike Caldwell, a spokesman for Vodafone, said the report,
which cited people familiar with the situation, was
''speculative'' and declined to confirm or deny it. An AirTouch
spokeswoman couldn't be immediately reached for comment.
Vodafone has long been viewed as a possible partner for San
Francisco-based Airtouch because their combined European
businesses would cover the continent from Sweden to Egypt with
little overlap. Analysts said a combination would be good for
the Newbury, England-based company.
''Together they would cover 95 percent of Europe and there
are real benefits of scope and scale to the acquisition,'' said
John Tysoe, an analyst at SG Securities. ''They could turn to
(mobile phone makers) Ericsson and Nokia and get better delivery
schedules and they could make considerable savings in terms of
head office expenses by running Vodafone and AirTouch Europe as
a single integrated company.''
Vodafone shares rose as much as 50 pence, or 4.8 percent,
to 1,099p.
Reports that Bell Atlantic was in talks to buy AirTouch
first surfaced on Thursday and both companies have since
confirmed they are in discussions. Bell Atlantic and AirTouch
wouldn't comment on the price or when they expect an agreement.
Yesterday, AirTouch shares fell 5.8 percent yesterday amid
speculation that Bell Atlantic won't pay as much as investors
had hoped for the company.
''People are disappointed because they'd like to see
Vodafone involved for international properties,'' Stephen
Parlett, an analyst at Montgomery Asset Management in San
Francisco, said yesterday.
Premium
''Clearly we would watch this situation,'' Vodafone's
Caldwell said before the Wall Street Journal report. ''We don't
know what the Bell Atlantic deal is, if there is one, and we
await development there.''
The Wall Street Journal report said terms of the Vodafone
offer, which hasn't been made public, weren't available. It
reported people familiar with the matter said the Vodafone bid
is mostly in stock, with a small component perhaps in cash.
''If Vodafone can pull off that sort of deal at a
reasonable price it will definitely be seen as a positive,''
said Steve Jobber, an analyst at Paribas Capital Markets in
London. ''$45 billion is only about a 10 percent premium to
AirTouch's market value in December -- I think it will be in
excess of that.''
Vodafone, with a market capitalization of 33 billion pounds
($55 billion), would nearly double its size if it bid for the
whole of AirTouch, whose market capitalization is about $39
billion.
SG's Tysoe said Vodafone may opt to buy all of AirTouch,
which has businesses in Japan, Korea, and India as well as in
the U.S and Europe, even if it only wants the European business.
It is already a partner with AirTouch in mobile phone businesses
in Sweden and Egypt.
''Would it still be worth mounting a bid for the company if
you are going to sell half of it? The answer I think is yes,''
he said. ''What they do want is Germany, Portugal, Spain, Italy,
Belgium, and Sweden -- that's enough to make it worth doing.''
More Competition
Vodafone, one of the U.K.'s first two mobile phone
companies, has increased its overseas business to about one-
third of its operating profit as it faces more competition from
rivals in Britain. It's stakes in mobile phone companies span
from Fiji to France.
Vodafone has looked into buying AirTouch in the past and
has already determined that the combination would help it cut
costs, analysts said.
Paribas' Jobber said talks between the two companies in
1997 came to nothing because AirTouch was already in talks with
Bell Atlantic.
Shares in Newbury, England-based Vodafone jumped 7.5
percent yesterday after it said it added a record 933,000
British mobile phone customers in the fourth quarter, well ahead
of its closest rivals and more than triple the 241,000 it added
in the year-earlier period.
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