Shares of UK-based mobile communications company Vodafone (NYSE: VOD [FREE Stock Trend Analysis]) gapped higher at the market open on Monday after reports suggested that the company is exploring the possibility of divesting its 45 percent stake in Verizon Wireless. During the final hour of trade, Vodafone was trading up around 1.40 percent to $28.41 after opening the session at $28.70. London's Sunday Times reported that the company has held a series of talks with Verizon (NYSE: VZ), its partner in the joint venture, about a potential sale. A number of strategic options may be on the table, including a mega-merger of Verizon and Vodafone, although such a transaction may garner anti-trust scrutiny. Reports, indicate, however, that Vodafone is most interested in a complete sale which could net the company $135 billion. According to The Sunday Times, Vodafone is looking to completely exit the American market by monetizing its substantial stake in Verizon Wireless. Any transaction, however, would be both massive, and could trigger substantial capital gains tax liabilities. Last week, analysts at Citigroup speculated that Verizon has the ability to take full control of the joint venture, but that it might have to raise as much as $80 billion in debt to pull it off. Citigroup upgraded Verizon to Buy on speculation that a deal will eventually be announced. Citi said that a deal in which Verizon purchases Vodafone's stake in Verizon Wireless could be in the $106 billion to $137 billion range and would require between $70 billion and $80 billion in debt funding. Citi analyst Michael Rollins told clients that there is more than a 50 percent change that the buyout would be cash-only and a 15 percent chance that a full merger will take place. Rollins also acknowledged the potential tax implications of any transaction, and estimated that Vodafone could be on the hook for $5 billion in U.S. tax liabilities if a deal is reached.
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