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By Sinead Cruise and Chris Vellacott
LONDON, April 27 (Reuters) - Six major Vodafone investors said $100 billion was not enough for the Britishcompany's stake in its U.S. joint venture with VerizonCommunications, and urged the latter to come up with anoffer of at least $120 billion.
Their comments followed a Reuters report on Wednesday thatVerizon had hired advisers to prepare a possible $100 billionbid to buy Vodafone's 45 percent stake in their Verizon Wirelessjoint venture, likely to be structured as a roughly 50:50 cashand stock bid.
Should the $100 billion figure stand, the six shareholders,with around 1.3 billion of Vodafone's shares between them, saidthey would prefer the British group to push for a full mergerwith Verizon instead.
The main concern among investors contacted by Reuters wasthe fact that a sale of Verizon Wireless - the best performingasset by far in the Vodafone portfolio - would highlight theoperator's exposure to its troubled European markets.
"Without wishing to be too disrespectful, (Vodafone is)sitting with a rather ugly set of assets once you lose theVerizon Wireless stake," said Ralph Brook-Fox, UK equities fundmanager at Ignis Asset Management, a top 40 institutionalshareholder in Vodafone.
"I think the merger or full takeover scenario, although notat the forefront of discussions right now, could actually end upbeing the more palatable deal."
Verizon Communications released a statement earlier thismonth to say it did not have any intention to merge or make anoffer for Vodafone following bid speculation.
Vodafone's share of Verizon Wireless represented around halfof the British group's adjusted operating profit in the sixmonths to the end of September 2012, according to its financialresults.
It also received before the end of 2012 a 2.4 billion pounddividend from its Verizon Wireless stake, and said it would passon 1.5 billion pounds to its shareholders via a buyback, showingthe importance to the group of its holding.
Among its core European operations Vodafone operates incrisis-hit and heavily regulated markets such as Italy, Spainand Portugal, where revenues have come under pressure because ofeconomic turmoil and intense competition.
With that in mind, investors contacted by Reuters wouldrather an offer for the stake at between $120 billion and $135billion as acceptable. At its current share price, Vodafone'swhole market capitalisation stands at around $146 billion.
"I think ... $120 billion is the point where you thinkyou've got a decent premium," one top 20 shareholder said, onthe condition of anonymity. "I think that's reasonable and ifthey achieve that, I think the (Vodafone) shares go up."
Another big question mark for Vodafone and its shareholdersis the potential tax bill the sale of its stake would incur:anywhere between $5 billion and $25 billion.
The wide range is due to a lack of clarity about whichholding companies within Vodafone own which assets - forinstance Vodafone America holds assets in a number of otherjurisdictions - leaving those outside the company unable to saywith any conviction how much tax would need to be paid.
