M&A Rumors Rear Again for Vodafone
Mar 20th 2013 9:58AM
Updated Mar 20th 2013 10:02AM
LONDON -- Having seen its share price return to former glory after six months of darkness, management at Vodafone has reiterated that it isn't under pressure to sell its stake in Verizon Wireless.
This announcement follows a speech by chief executive Andy Halford at a private Citigroup-organized conference held on Tuesday, in which he declared that the company would be willing to accept a lower debt rating if circumstances arose for a merger or acquisition. Shares in Vodafone slipped to 185.5 pence in morning trade from a previous close of 188 pence.
Vodafone is on an "A-" ranking by Standard & Poor's, although CEO Halford revealed that the telecommunications company would be willing to take a "BBB+" rating. Debt of about 7 billion pounds would take Vodafone one investment grade below its current one and could finance an acquisition -- it's worth noting that the previous reports of a potential takeover of German cable operator Kabel Deutschland were priced between 5 billion pounds and 8.5 billion pounds...
Intriguingly, however, Citigroup analysts upgraded Vodafone on Monday from neutral to buy, lifting the shares up to a six-month high of 188 pence, commenting: "We see a number of advantages supporting a decision to exit the U.S. now. The low interest rate environment, a strong operating performance from Verizon Wireless, improved balance sheet flexibility, a stronger dollar relative to sterling and the increase in U.S. telecoms valuations are all favorable factors."
It seems this story is far from over, then; almost-daily newsbytes on a Verizon Communications buyout of Vodafone's stake in their joint-venture and reinvigorated rumors of a Kabel Deutschland takeover are swinging the share price back and forth. As a shareholder, I recently reduced my holding in the company in order to finance a buying opportunity I felt I couldn't miss, but it remains a significant position in my budding portfolio due to the strength of its yield.
If you already hold Vodafone shares as well and are looking for a stock on a similar yield, then you may wish to read this exclusive, free in-depth report. The FTSE 100 company in question offers a 5.7% income and might be worth 850 pence versus a current price of around 735 pence. Just click here to download the report -- it's absolutely free.
The article M&A Rumors Rear Again for Vodafone originally appeared on Fool.com.Sam Robson owns shares in Vodafone. The Motley Fool recommends Vodafone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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