Tax Payable Major Hurdle in Verizon-Vodafone Deal

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The chances of Verizon Communications buying out Vodafone Group Plc of UK from its venture Verizon Wireless can be attributed to a number of factors. One of them would be the tax advice Verizon Communications would receive should it opt to purchase the 45% shareholdings of its partner.

Verizon is currently the second largest telecommunications company in the United States. It may have found a way to structure its purchase of the Vodafone shares to help Vodafone avoid a huge capital gains tax bill, according to sources familiar with the plans. This is considered as one of the major hurdles for the sale according to many analysts/

Last week, Reuters broke the story that Verizon is preparing to bid valued at US$100 billion in order to buyout Vodafone in the venture. There were no guarantees reported that Vodafone is selling off its shares or if Verizon would actually push through with the bid.

According to one person familiar with the transaction, no tax payout can be calculated by Vodafone without any formal bid made by Verizon for the shares.

Tags
Verizon Communications, Vodafone Plc, Verizon wireless, Joint venture

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