Vodafone and US rival Cingular are poised to go head-to-head in a $30 billion-plus battle to take control of AT&T Wireless just hours before a bid deadline today.
Vodafone is putting the final touches on a bid as the 10 p.m. deadline looms, but talks will go down to the wire, one source close to the situation said today.
"What happens in these auctions is that everybody is making decisions until the last minute about how they want to play it and then after that, the ball is in the sellers' court," one source close to the talks said.
"It looks like they're going to do it in a way that makes sense for their shareholders."
Vodafone is widely expected to submit an offer of about $35 billion (18.5 billion pounds), or around $12.50 per share, trumping an informal $30 billion bid from Cingular, the number-two US wireless group controlled by SBC Communications and BellSouth.
Vodafone, which has one of the strongest records in the industry for making a success of takeovers, insisted on Thursday it was still exploring whether a deal with AT&T Wireless was in investors' interests and has declined to comment further.
However, a growing number of Vodafone investors believe Chief Executive Mr Arun Sarin will bid for an asset that would give the group long sought-for control of an asset in the world's most powerful economy and bring its brand across the Atlantic. But they are awaiting a strong investor case for a bid.
Hopes of a Vodafone bid between $12 and $12.50 per share have sent shares in AT&T Wireless surging. The stock closed up about 1.5 percent at $11.67 on Thursday, valuing the group around $31 billion.
Vodafone stock, which has fallen around seven percent in the last three weeks on concerns about a bid for a struggling U.S. mobile group whose 17 percent market share is being eroded by fierce competition, climbed more than two percent to 134.81p by 10:20 a.m.
Market reaction to a Vodafone bid, which analysts say could dilute earnings for around four years, hinges in part on whether Vodafone can negotiate a satisfactory price for its 45 percent stake in U.S. mobile market leader Verizon Wireless.
The stake is valued at $20-25 billion. But an exit could leave Vodafone with a tax bill of up to $6.0 billion, analysts and investors believe.
Vodafone and Cingular are considered the only serious contenders for AT&T Wireless, which is 16-percent owned by Japan's NTT DoCoMo. Despite speculation of a possible Japanese counter-bid, top executives at the company met overnight and company sources said they were unlikely to bid.