Vodafone looks to be on the verge of completing the third-biggest deal in corporate history by selling its 45 per cent stake in its US mobile joint venture Verizon Wireless for up to $130bn (£83.6bn).
The British telecoms company is believed to be days away from agreeing to a deal with Verizon Communications, which owns a majority 55 per cent stake in Verizon Wireless.
Vodafone shares rocketed almost 10 per cent during trading today to as high as 207p, their best level in 12 years, after the FTSE 100 company said it was "in discussions with Verizon".
A deal could happen as soon as Monday, according to reports.
Investors, including many leading British pension funds, are in line for a huge windfall as Vodafone is set to return most of the proceeds to shareholders.
Speculation has raged for months that Verizon wanted to buy out its British partner, but Vodafone has resisted formal talks – until now.
The two sides have had an awkward relationship and were said to have been unable to agree a price during preliminary talks earlier this year.
Verizon reportedly suggested about $100bn at the time and Vodafone wanted closer to $130bn.
Analysts reckoned the decision by Vodafone's chief executive, Vittorio Colao, to hold out for a better price was likely to have worked.
Tom Gidley-Kitchin, an analyst at Charles Stanley, said: "Vodafone doesn't have to sell. They are quite prepared to wait. I don't think Vittorio Colao is going to be bamboozled into selling at a sub-optimal price, so I think Verizon will understand they will have to pay closer to $130bn."
Vodafone used traditional stock-market language to caution: "There is no certainty that an agreement will be reached."
If Verizon ends up paying $130bn, it would rank as the third-biggest takeover deal ever, after Vodafone's own $203bn acquisition of Germany's Mannesmann in 1999 and AOL's $165bn purchase of Time Warner in 2000.
Both of those deals turned out to be over-priced, but analysts reckon telecoms sector valuations are more restrained now.
This is just the latest takeover move in the telecoms sector this year after Liberty Global bought Virgin Media, Telefónica bid for Germany's E-Plus and Vodafone itself bought Germany's Kabel Deutschland.
Hopes of a deal had appeared to fade earlier in the year when Verizon ruled out a full-blown takeover of Vodafone, sending its share price into decline.
But City investors have been quietly optimistic since Vodafone's chairman, Gerard Kleisterlee, signalled at the annual meeting last month that it would consider any offer for its US business.
Vodafone shares ended the day up 15.45p at 204.75p.Reuse content