Vodafone Says No to Verizon's $100 Billion Non-Offer

US cable giant Verizon Communications VZ has not even officially made an offer to Vodafone Group VOD for Vodafone’s 45 percent stake in Verizon Wireless.

Despite this, Vodafone has already rejected the non-offer on the basis that the $100 billion Verizon is expected to eventually offer is “nowhere close” to the amount shareholders demand.

The UK Guardian reported Thursday that Verizon is considering a half cash, half shares offer for the 45 percent stake of Verizon Wireless that the company doesn’t already own.

See: Verizon Rumored Ready to Offer $100 Billion to Vodafone for Verizon Wireless

"Valuation will need to climb much higher to create an outcome acceptable to Vodafone shareholders," Jefferies bank analyst Jerry Dellis said. Dellis values the stake at $120 billion. "Our sense is that Verizon is attempting to up pressure on Vodafone to engage in discussions. The glaring issue is price – $100 billion is nowhere close to the level at which Vodafone can consider a deal."

One anonymous top-40 Vodafone investor said there was "absolutely no way" shareholders would accept the mooted price, but that $135 billion would suffice.

Australian hedge fund boss John Hempton, whose Bronte Capital is heavily invested in Vodafone, said the price being discussed was "not enough,” and that the proceeds of any deal should be handed directly to investors.

The difference, according to The Wall Street Journal, seems to be around $20 - $35 billion, depending on who is right. The disagreement over price is in the spotlight now that Verizon has launched its public push.

Verizon has already indicated that if a friendly deal cannot be worked out, it would be prepared to take its offer public in a $100 billion hostile bid, Independent.ie said Friday.

This past January, in an “upping the ante” move, Verizon Chief Executive Lowell McAdam said his company had the financing to make the deal happen. Finance chief Fran Shammo added that Verizon had devised a way to allow Vodafone to sell without taking a huge capital gains tax hit.

Vodafone has argued that the tax bill could top $10 billion or more. Verizon’s public disagreement was seen as a direct appeal to Vodafone shareholders to put pressure on the company’s board and CEO, Vittorio Colao, to come to negotiating table, a person familiar with the matter told The Wall Street Journal.

Vodafone’s most recent rejection of Verizon’s theoretical offer – all played out in the press – may be a way for both sides to get their cards on the public table prior to real, face to face negotiations.

Meanwhile, Verizon closed Thursday at $53.22, up $.74 on the day. After starting out at $30.37, Vodafone went as high as $30.52, before finally settling at $30.42, up $.06.

As of this writing, Jim Probasco has no position in any mentioned securities.