One of the biggest financial transactions between a British and an American company closed yesterday with the completion of the deal in which Vodafone is to sell its 49 per cent stake in one of the leading US mobile phone operators to Verizon, its partner in the venture. Vodafone shareholders will receive a shares and cash package worth some £50bn.
To put this in context, it is more than the Government spent to rescue Royal Bank of Scotland, and on a par with the tranches of stimulus to the economy delivered by the Bank of England. In effect Vodafone shareholders are getting their own private tranche of quantitative easing.
The question is what do they do with the money? Bulls of the stock market are rubbing their hands at the potential impact on share prices across the board when that money finds its way into the markets, and that may be what happens. There are also a lot of new issues coming to market.
But there is also a powerful case for investors simply doubling up their bet on Vodafone. It is a company which will either attract a bid itself from AT&T or more likely continue to plough a successful furrow as one of the leading mobile operators – at a time when mobile connectivity is becoming the ever more dominant technology.
It is also, with Vittorio Colao, being run by one of Europe’s great business leaders. Some fund managers say you should only invest in a business which could be run by an idiot because one day it will be. But that surely should not stop us enjoying the fact that at the moment Vodafone is run by a man who thinks about what kind of business its customers would like it to be, and who is willing to sell when prices are high rather than be tempted to make costly acquisitions.