Vodafone M&A speculation pushes markets higher
Fiona Cincotta April 2, 2013 10:40 PM
<p>European markets pushed higher on Tuesday afternoon, extending gains from last month and finding optimism in the telecoms sector which was lifted by M&A rumours […]</p>
European markets pushed higher on Tuesday afternoon, extending gains from last month and finding optimism in the telecoms sector which was lifted by M&A rumours surrounding Vodafone.
There has been an increase in M&A activity year to date and investors are keen to follow up these possibilities. Shares in Vodafone have increased significantly over the past few weeks as they have been the source of speculation and today they soared as much as 5% in early trading after the Financial Times said that Verizon Communications Inc and AT&T Inc are working on a break up bid. It has been suggested that any offer would be pitched at around a 40% premium to current market prices, therefore placing Vodafone’s enterprise value at $245 billion, potentially making it the biggest M&A deal in history, should it go ahead.
After starting the year around 160, the share price for Vodafone has steadily risen to its current level of 192 and could continue to drive higher should any further evidence of a bid from Verizon be released to the market. Sector peers were also boosted by today’s report.
The general upward trend for the FTSE remained strong despite weak eurozone PMI data showing that manufacturing in the zone fell further into decline in March, although the contraction was slightly less than actually predicted, indicating that the trouble from Cyprus had not yet caused a great impact on the region.
However officials from Cyprus are expected to complete the bailout agreement this week. International lenders have softened their terms slightly by giving an extra year to the island to meet budget targets, so until 2017 to achieve a budget surplus target of 4%.
Elsewhere in Europe, Italian President Giorgio Napolitano is meeting with advisors in an attempt to break the political deadlock which has plagued the country since the inconclusive elections in February. Italy remains leaderless as no alliances have been created due to constant bickering and therefore preventing any further reforms moving the country forwards. So far the markets have managed to turn a blind eye to the situation, however, some progress will need to be made in the coming weeks in order for the market to remain satisfied.