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Vodafone Drops on Report It Supports Bid for Sprint (Update3)

http://www.bloomberg.com/apps/news?pid=10000087&sid=ayL43juqmwfg&refer=top_world_news

Dec. 14 (Bloomberg) -- Shares in Vodafone Group Plc, the world's largest mobile-phone operator, dropped after The Wall Street Journal said the company is considering bidding with U.S. partner Verizon Communications Inc. for Sprint Corp.

Vodafone would probably take a 45 percent stake in the new venture, the same as its ownership in Verizon Wireless, the Journal reported, citing unidentified people familiar with the situation. The rest of the more than $40 billion total price would be paid by Verizon, the newspaper said today.

Sprint, the third-largest U.S. mobile-phone company, and Nextel, ranked No. 5, are considering a combination to create a larger competitor to Cingular Wireless LLC and Verizon Wireless, people familiar with the matter said last week. Under Vodafone's shareholder agreement with Verizon Communications, a bid for Sprint would require the approval of both partners.

``The market is showing that it might become too expensive,'' said Peter Braendle, who helps manage about $1 billion at Swissca Portfolio Management in Zurich, and owns Vodafone shares. ``I would hope that Vodafone had learned their lesson.''

Vodafone investors are harboring concerns after the company lost the $41 billion auction for AT&T Wireless Services Inc. in February. Vodafone shareholders, anticipating that earnings would be eroded, wiped 11 percent off the company's market value as the operator weighed the merits of a bid.

``This is a matter for Verizon, not for us, and we have no comment to make,'' Vodafone spokesman Bobby Leach said today.

Shares Drop

Vodafone Chief Executive Arun Sarin, 50, said last month he isn't interested in bidding for any U.S. wireless asset and plans to remain a Verizon Wireless shareholder. At the company's annual meeting in July, Vodafone said its bid for AT&T Wireless had damaged shareholder confidence.

Shares of Newbury, England-based Vodafone fell as much as 6.5 pence, or 4.6 percent, to 136.5 pence, the steepest decline since May. The stock traded at 138 pence at 11:53 a.m. in London. Goldman Sachs Group Inc. today cut its rating on the stock to ``in-line'' from ``outperform.''

Sprint shares rose to $25.93 in Germany as of 11:54 a.m. Frankfurt time from a close of $24.44 on the New York Stock Exchange yesterday.

According to the Journal, Vodafone wants to support a Sprint takeover by Verizon because it plans to maintain a presence in the U.S., although it doesn't intend to acquire Overland Park, Kansas-based Sprint itself.



To contact the reporter on this story:
Angus Whitley in London at [e-mail]

To contact the editors responsible for this story:
Lars Klemming at [e-mail] or
Zimri Smith at [e-mail]
Last Updated: December 14, 2004 06:59 EST