Telecoms giant Etisalat has made a £3.6 billion ($4.4 billion) swoop on Vodafone shares.
The Abu Dhabi-based company revealed yesterday it had snapped up almost 10 percent (9.8 percent) of the FTSE 100 firm.
The mammoth trade makes Etisalat the biggest shareholder in Vodafone, ahead of major institutions such as Vanguard and HSBC.
It comes days after reports that Vodafone was in talks to combine its UK arm with rival Three, which would unite Britain’s third and fourth largest mobile networks.
Government-controlled Etisalat, also known as e&, said the stake gave it ‘significant exposure to a world leader in connectivity and digital services’ and that it wanted to find commercial opportunities with Vodafone.
In a statement yesterday, Etisalat boss Hatem Dowidar said: ‘We see this as an investment for e& and its shareholders as it will allow us to enhance and develop our international portfolio.’
Etisalat said it had ‘no intention to make an offer’ to buy Vodafone. It said it would be a long-term investor and ‘fully supportive’ of the board and current business strategy.
Vodafone’s stock is likely to surge tomorrow as Etisalat paid an extra 10 per cent for the 2.7 million shares. It paid around £1.30 per share, compared with the closing price on Friday of £1.18.
The dramatic turn of events comes as Vodafone boss Nick Read scrambles to fend off Swedish activist investor Cevian Capital, which is understood to be pressing for sweeping changes that include restructuring the business and refreshing its board to boost the lagging share price. Etisalat’s support may help Read in his pushback against Cevian, Europe’s biggest activist investor. Led by managing director Christer Gardell, it has also targeted publisher Pearson and insurer Aviva.
Cevian has not yet revealed the size of its stake or publicly stated its demands.
In February, Read said he was working on new merger and acquisition deals ‘at pace’ to quell criticism from Cevian.
Read pointed out that he has completed 19 transactions since 2018 – calling his activity ‘unparalleled’.
He also promised to return more money to investors, often a key call from activists, as Vodafone reported signing up 152,000 new UK mobile customers.
Vodafone said: ‘We continue to make progress with our long-term strategic plans and will provide an update in our full-year results announcement [on Tuesday].’
© Associated Newspapers Ltd.