David Einhorn made the case in his most recent quarterly letter to investors that the market was placing no value on Vodafone’s (NASDAQ:VOD) stake in Verizon Wireless. However, due to the increasing dependence on the wireless business, the Greenlight Capital founder explained it would not be surprising if Verizon Communication’s (NYSE:VZ) decided to buy all of Vodafone to gain total control of Verizon Wireless. “Maybe there is an investment banker with time on their hands reading this letter,” he wrote. The call to action has not gone completely unanswered.
Citigroup is now calling for Verizon Communications to purchase the 45 percent of Verizon Wireless is does not already own from Vodafone. Analysts at the bank believe a leveraged deal is possible and would increase Verizon’s earnings and cash almost immediately. A deal would likely place a value of the Vodafone stake between $106 billion and $137 billion, and take between $70 billion and $80 billion in debt to accomplish, according to the WSJ.
Verizon tried to buy Vodafone’s stake in 2006 but failed. Einhorn is not the only person generating interest in another deal. Earlier this year, Verizon CEO Lowell McAdam said he would “love to own all of that asset” when referring to Verizon Wireless. Shortly thereafter, Vodafone CEO Vittorio Colao said his company has an open mind “on everything.”