Vodafone shares surge 12%, Xavier Niel spends $5.95 billion for huge stake

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Niel becomes Vodafone\'s largest shareholder

e& exits after four years of investment

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Vodafone\'s (VOD) share price surged more than 12% to close at 110.10 pence in London trading on Friday, The highest closing price since mid-June.

United Arab Emirates telecommunications company e& sold its entire 16.3% stake in Vodafone to Xavier Niel\'s investment vehicle Vega for a deal value of US$5.95 billion.

VOD shares are valued at 112.5 pence per share in this transaction, a 13% to 15% premium to Thursday\'s closing price of 97.76 pence.

Xavier Niel will become Vodafone\'s largest individual shareholder after receiving regulatory approval.

According to Morgan Stanley analysts, Niel\'s extensive telecommunications industry experience makes him a potential long-term value shareholder, and the market focus is turning to Vodafone\'s German business unit.

Vodafone (VOD) shares surged more than 12% to close at 110.10 pence in London trading on Friday, setting their strongest closing price since June 19.

Vodafone Group Public Limited, ticker code VOD.

The sharp rise in share prices came as United Arab Emirates telecom operator e& Group confirmed that it had reached an agreement to sell its entire 16.3% stake in Vodafone for approximately US$5.95 billion.

The buyer was Vega, an investment entity wholly controlled by the French telecommunications giant Xavier Niel family.

The agreement values VOD shares at 112.5 pence per share, a premium of 13% to 15% to Thursday\'s closing price of about 97.76 pence.

Vega will receive approximately 16.2% of Vodafone\'s outstanding shares, and Niel will become the largest shareholder after the transaction is completed and regulatory approval is obtained.

e& initially purchased a 9.8% stake in Vodafone for US$4.4 billion in 2022, later increased its holdings, and finally decided to sell its entire stake after making a profit.

Niel becomes Vodafone\'s largest shareholder

Niel described Vodafone as a \"compelling investment opportunity,\" emphasizing its high-quality asset base, strong brand portfolio and geographically diversified business layout.

He highlighted Vodafone\'s dominant position in tapping value in European and African markets as it transforms into a \"simpler, more focused company.\"

Niel holds telecommunications assets in as many as nine European countries through its Iliad enterprise, serving approximately 50 million active users and annual revenue exceeding 10 billion euros.

Previously, he had twice tried to acquire Vodafone\'s Italian operations, but was rejected.

Morgan Stanley pointed out that the transaction established Niel as a new cornerstone investor in Vodafone.

The investment bank stressed that Niel\'s credentials in the telecommunications industry and little overlap with Vodafone\'s existing business operations suggest he could become a stable long-term supporter.

Market observers will be watching how Niel and his management team are actively involved in Vodafone\'s operating decisions, especially in the German market, where Vodafone still lags behind market leader Deutsche Telekom in the region.

e& exits after four years of investment

e& describes the sale as a \"natural evolution\" of its strategic priorities, aiming to focus on core business while realizing the realization of investment.

CCS Insight analyst Kester Mann said the development was an unexpected reversal for e&(formerly Etisalat), which had previously positioned itself as an expanding global telecommunications and technology company.

Mann believes the deal shows that the Middle Eastern operator is abandoning its global expansion ambitions and turning its attention back to its home market.

Despite withdrawing its shareholding completely, e& confirmed that its strategic partnership with Vodafone will continue in the areas of procurement, technology platforms, enterprise solutions and digital infrastructure.

Vodafone acknowledged the development, saying it had established a strong relationship with the Niel family and looked forward to working with them as a \"supportive long-term shareholder.\"

Under the leadership of CEO Margherita Della Valle, Vodafone has withdrawn from the Spanish and Italian markets and completed its merger with Three UK in 2023 to become the UK\'s largest mobile network operator.

On Friday, the FTSE 100 index was basically flat overall, while Vodafone\'s gain of more than 12% significantly outperformed the broader market.

e& shares fell 1.12% after the announcement.

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