The week will be remembered for Vodafone’s mega-deal to sell its stake in America’s Verizon Wireless for a whopping £84 billion in the second biggest corporate transaction of all-time.
The British telecoms giant sold its 45% in America’s biggest mobile operator, which will mean a £54bn windfall for shareholders, with the pay-out amounting to 71% of the proceeds.
Vittorio Colao, Vodafone’s chief executive, said the sale would greatly enhance the group’s long-term prospects through Project Spring, its programme of additional organic investments in 4G, 3G, fibre and broadband and other services.
“Project Spring will strengthen and accelerate our existing Vodafone 2015 strategy, enabling us to take even greater advantage of the growing global demand for ubiquitous high-speed data,” said the Italian CEO.
“This will in turn underpin our intention to grow the dividend per share annually.”
Analysts welcomed the deal, but said it now leaves the group exposed to a possible bid from a fixed line telecoms company looking to expand.
James Britton, an analyst as Japanese broker Nomura, said the substantial return of the proceeds to shareholders had reduced Vodafone’s firepower for large deals of its own and added to its potential bid appeal.
“Vodafone’s de-coupling from Verizon in the US, its European mobile footprint and its accelerated investment strategy could catch the eye of other global consolidators like AT&T,” he said.
It is hoped the sale will spur on corporate activity worldwide after years of stagnation on the deal-making front.
Elsewhere, a shock profit warning from low-cost airline Ryanair (LON:RYA), which said the summer heatwave had affected bookings for the coming months, saw shares in Footsie carriers IAG (LON:IAG) and easyJet (LON:EZJ) nosedive.
The British Airways owner made a strong recovery to end the week 5% higher, while tour operating giant TUI travel (LON:TT.), which owns Thomson and First Choice, fell over the course of the five days.
Investment specialist Hargreaves Lansdown’s (LON:HL.) full-year profits impressed as £5.1bn was invested by customers last year – a rise of 38% on the previous year.
On top of the Vodafone deal, fears over a military strike on Syria boosted the market, with the Footsie up 2% to around 6,550.
A load of old bull?
Adding more detail about its £5.8bn rights issue, Barclays (LON:BARC) investors are being offered one share for every four they own at 185p, representing a 40% discount to the bank’s share price before the initial announcement.
The cash call is a response to the Prudential Regulation Authority’s demands to plug its capital shortfall of £12.8bn.
In a comic turn of events, the original stock exchange statement included links that diverted readers to a website run by cattle firm Colyer, Herefords & Angus, which sells – among other products – bull semen.
The news sent City journos into a pun-wielding frenzy, with some calling it an “udder mistake” and a “bulls-up”.
Bullish investors sent the shares up 4.7% this week.