Vodafone to talk to AirTouch
By Richard Waters and William Lewis in New York and Alan Cane in London
Senior executives from Vodafone and AirTouch may meet for the first time as early as today to discuss the UK wireless carrier's $55bn (£33bn) merger proposal, a sign of the seriousness with which the US company is treating the unsolicited offer despite its plans for a rival merger. Vodafone's offer, made over the weekend, arrived as AirTouch was negotiating a $45bn merger with Bell Atlantic.
Vodafone has brushed off suggestions that it might sell part or all of AirTouch's US operations after a merger. Vodafone's offer was prompted by its desire to control AirTouch's valuable European investments, rather than its larger but slower-growing domestic business.
The UK carrier insisted that it was determined to keep AirTouch's US business, but added that it was unlikely to use it as a platform to create a national network of its own. Investment bankers in New York said that any attempt by Vodafone to sell the US business would attract a large tax bill.
While it is expected to be some days before Chris Gent, chief executive of Vodafone, and Sam Ginn, chief executive of AirTouch, meet, other executives are scheduled to begin talking this week.
The discussions are likely to focus on the value of Vodafone's shares, which are the main currency for its offer. The company is thought to have offered approximately $90 a share in stock and a small amount in cash. The deal is being structured as a merger of equals, but the cash element would ensure that Vodafone shareholders retain marginally more than 50 per cent.
Bell Atlantic is likely to question the value of Vodafone's stock. People close to AirTouch were thought to be sceptical about Vodafone's high-flying shares, which trade on a far higher multiple of cashflow than its stock.
But the stock market reaction to Vodafone's offer may have calmed some nerves. On Tuesday, Vodafone's stock price rose 61½p to £11.10½ before slipping back slightly yesterday. By lunchtime on Wall Street, AirTouch's shares stood at $79,arise on the day of $4 1/16 and putting them comfortably ahead of the $75 a share value of Bell Atlantic's all-stock offer.
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