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M&A Rumors Rear Again for Vodafone

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LONDON -- Having seen its share price return to former glory after six months of darkness, management at Vodafone (LSE: VOD  ) (NASDAQ: VOD  ) 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.

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9/27/2016 12:01 PM
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