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Vodafone Group Public Limited Company Message Board

  • nigeco Nov 6, 2013 12:53 PM Flag

    Bernstein says 75% chance of a deal with AT&T

    Article from Yahoo
    Telecoms group Vodafone edges up by around 1 percent to add the most points to Britain's benchmark FTSE 100 index, as analysts at Bernstein raise their price target on Vodafone on the back of speculation of a possible merger with American peer AT&T (NYSE: T - news) .

    Bernstein increases its price target on Vodafone shares to 250 pence from 230 pence, while keeping a "market perform" rating on the stock.

    Vodafone sold its stake in Verizon Wireless (VZW) to its joint venture partner Verizon Communications Inc (LSE: VZC.L - news) for $130 billion in September, leaving it with a pan-European business spanning Britain to Romania and operations in the Middle East and Africa.

    AT&T has been eyeing Europe since the beginning of the year and has considered options including Vodafone and Britain's largest mobile carrier EE, a joint venture of Orange (Other OTC: FNCTF - news) and Deutsche Telekom (LSE: 0MPH.L - news) , sector bankers have previously told Reuters.

    "We have increased our price target to 250 pence which factors in a 75 percent chance of a deal with AT&T," Bernstein analysts write in a research note.

    "Operationally & strategically, both AT&T and Vodafone are experiencing a rough patch. The possible mega merger between the two that could be a welcome distraction for both appears to have the same momentum as the VZW/Vodafone deal earlier this year," they add.

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    • Bernstein just stepped up to get in line with similar analyst calls on bid amount but this 75% chance has to trump them all. I haven't seen any revision by Credit Suisse who had stepped out not long ago with a 50% chance of bid BY END OF YEAR. That was before the big Kroes meeting with EU heads giving her the consolidation nod.

      Eye_rub, With this 250-255 pence projection now becoming mainstream among the analysts, what was your net number on liabilities you factored vs. the "net debt" of 10B given by VOD management? This 250-255 pence less a 10B liability assumption PLUS the $17 VZW divy starts to push end game price to $55-56 area.

      Thx for posting Nige and looking forward to Eye_rub's response.

      Sentiment: Strong Buy

      • 1 Reply to smalls_62
      • Let's play downgrade the messenger because he posts reality rather than what you want.

        All of the research I have read arrives at a net current price target, which even I think is too low. 250 pence represents just over $40/share, and that is an estimate of TOTAL terminal value, which is inclusive of the $17 distribution as well as full consideration for the rump. To be perfectly clear, all price estimates I have seen are inclusive of all liability assumption as well as inclusive of the $17 Return Of Value. I think those estimates are too low, but not as low as you do. Paul Marsch at Berenberg suggests that a 265p to 275p price is possible, but I have not seen his research first hand--however, that is where my calculations lead me. Finally, the real kiss of death is Bienenstock raising price target from $35 to $40. Time to bend over and assume the position when the biggest bear turns bullish?

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