Press accounts provide drama on the power struggle between Verizon and Vodafone over the fate of their JV money printing machine, Verizon Wireless. Negotiations must be underway in the smoke filled back rooms, but it is exciting to have the “leaks” in the industry press provide the melodrama. It will be fun to watch how this plays.
Rumors are that Verizon seeks to buy Vodafone’s interest in Verizon Wireless for $100B. Indignant Vodafone investors stand shoulder to shoulder like the Redcoats of yore and fire a broadside volley at the colonials - and say that’s not enough!
With 55% control of VzW, Verizon clearly has the higher ground. So rather than fire off return volley, they hunker down and threaten a strike at foe’s weak spot. Hit them in their money purse – and withhold the cash dividend.
But apparently VzW doesn’t really want to withhold their own dividend, so they threaten through the media and measure the response. Who will blink first? Probably the one with the greatest need for the cash. But in any event, keep watching and see how things progress.
History tells us that most mega-acquisitions don’t turn out as hoped, but this one might be different. Verizon knows exactly what they have with VzW, and only need to avoid paying too much. And they can tighten the dividend screws on Vodafone to “encourage” peace talks. Terms of surrender might be a more appropriate description.