Vodafone shares fall back as talk of merger with Verizon turns cool

Vodafone’s recent share price rally fizzled out yesterday as US joint venture partner Verizon Communications denied the pair had any plans to merge.

However, the American firm said it would be “a willing purchaser” of Vodafone’s 45 per cent stake in Verizon Wireless, the highly profitable US business they jointly own.

Analysts said that was probably a signal to Vodafone shareholders that if they wanted a deal, the onus was on their own board to sell. Vodafone shares closed down 3 per cent at 186.15p. The Verizon statement added that “it does not currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others”.

Hide Ad
Hide Ad

Vodafone’s stock has risen more than 25 per cent this year on hopes it would sell its stake in Verizon Wireless for around $115 billion (£76bn). It is thought both want to end the relationship but the size of the deal makes it hard to agree a price that Verizon is able to justify. An outright sale would also land the UK group with a substantial tax bill, and investors and analysts had suggested the two groups may prefer to merge. There was also speculation that Verizon could team up with a rival to buy and break up Vodafone.

However, Mike van Dulken, head of research at Accendo Markets, said Vodafone shareholders shouldn’t be too concerned as the “flirt dance” around mergers can be “a very long, stop-start number”.

He added: “If anything, intensification of recent market talk just serves to highlight, and potentially even increase, the perceived value of the US wireless joint venture.”

Related topics: