Companies looking to make a formal offer for AT&T Wireless Services [AWE] have until February 13 to submit their formal bids for the number-three ranked US mobile operator. Cingular is thought to be the most likely acquirer, but Vodafone [VOD.L] may also be worth watching.
AT&T Wireless has set a deadline for takeover offers.
AT&T Wireless’s investment banker, Merrill Lynch & Co [MER] sent a letter to potential suitors, in which it revealed it would evaluate any acquisition offers it receives by February 29.
The letter was sent to all potential suitors of AT&T Wireless, including the parents of Cingular Wireless (SBC Communications [SBC] and BellSouth [BLS]), NTT DoCoMo [9437.TO], Nextel Communications [NXTL], T-Mobile USA, and Vodafone Group.
Cingular is thought to be the front-runner after it expressed the most interest, and it is known to be keen to expand its wireless offerings to offset the declining business in its parent companies’ core fixed-line operations. However, there are signs that Vodafone could flex its financial muscle and decide to enter the reputed $30 billion auction.
The UK mobile giant has reportedly been talking to its banks about loan financing for possible acquisitions, according to Forbes, which quoted banking sources. Although Vodafone is thought to be in regular contact with its bank about existing and possible new credit facilities, recent discussions have been more focused following speculation of an AT&T Wireless bid.
One banker is reported to have said that the discussions have centered on liquidity for Vodafone and what it could put together. It is believed that Vodafone could raise up to $30 billion for acquisitions. Such fund raising would be viewed as aggressive, but not unfeasible according to the sources.
But Vodafone has also not ruled out a bid for Cegetel, and hence France’s second largest mobile phone operator SFR. It is also thought to be keen to raise its 20% stake in Poland’s Polkomtel, and other operators in eastern Europe. The current strength of the British pound against the US dollar could be also a factor in deciding where to direct a bid.
Vodafone would have to overcome shareholder and analyst concerns if it were to launch a bid for AT&T Wireless. Some argue it would be unwise to trade a minority position in the largest US operator (its 45% stake in Verizon Wireless) for control of a weaker rival.
This article is based on material originally published by ComputerWire.