At one stage the share price had risen 21p in the space of an hour to a record 298p, as rumours spread that a German utility giant was preparing to launch a bid. The company rushed out the announcement in an attempt to calm the markets, though by the close of trading the share price was still up 7p at 285.5p, valuing the group at more than pounds 8.5bn.
Later a Vodafone spokesman again insisted there was absolutely no truth in the speculation. He said: ''We have definitely not received any approaches from third parties. The rumour doing the round was that an unspecified German company had made an approach and we checked it out and it was totally untrue.''
The flurry of activity centred on speculative investors on the options and futures market who began betting on a substantial surge in the group's share price. ''This was spiv buying and it's difficult to know if there's any substance to it,'' said one analyst last night. Almost 20 million Vodafone shares were traded yesterday.
No names were linked to the rumours, though Vodafone has long been a favoured bid target. One suggestion was that Mannesmann, the diversified industrial group, was examining a takeover bid to expand its mobile phone interests. Mannesmann is a leading mobile operator in Germany, but analysts argued it could use Vodafone's networks in 12 countries to develop its overseas interests. Other possible contenders mentioned were Veba and RWE, which are in the process of severing their partnership, called Vebacom, with Cable & Wireless.
However, another explanation was that the futures market had misinterpreted comments attributed to an unnamed German executive. ''It's just possible there could be a hostile bid, but I wouldn't put money on it,'' said one analyst. He went on: ''However, it looks like the shares will be in for a bit of turbulence in the next few days.''
Analysts have recently tipped Vodafone shares with a ''buy'' recommendation, arguing that the company's valuation was considerably lower than that of operators on the Continent. Last year's intense price war with Orange, Cellnet and One2One had depressed share prices across the sector. Vodafone has also been persistently linked with the US phone giant, AT&T, since its demerger from Racal, the electronics and defence group, in September 1991. Since then Vodafone's shares have substantially outperformed those of its former parent.
Market report, page 21