WITH the prospect of a full takeover off the table for now, Vodafone investors have switched focus to whether the British group might sell its best performing asset, its $115 billion (£76bn) stake in Verizon Wireless.
Vodafone shares closed down 3% yesterday after Verizon Communications said it had no intention of buying the world's second-largest mobile operator, following months of speculation.
The British group's shares had risen more than 25% since the start of the year on hopes it would either sell its 45% stake in Verizon Wireless and return cash to shareholders, or sell itself to the operator's majority owner Verizon.
"As Verizon has said many times, it would be a willing purchaser of the 45% stake Vodafone holds in Verizon Wireless," Verizon said.
"It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others."
One top 15 shareholder in Vodafone said chief executive Vittorio Colao had played his hand well until now, facing down previous demands to sell the stake in a business that has grown into the biggest mobile operator in the United States.
With Vodafone now receiving a hefty annual dividend from the business, the shareholder believes the group is in a stronger position to negotiate an exit when the time is right, and they sense a change in sentiment.
Strategists at Olivetree Securities said the statement was designed to reach Vodafone shareholders directly, to try and break the deadlock over an exit that has existed since Verizon Wireless was formed by the two groups in 1999. "That message appears to be: 'If you want a deal, it's your own management team holding this up – you need to tell them to engage more intensely/shift their price expectations'," it said.
Vodafone has lawyers from Linklaters, bankers from UBS and consultants from McKinsey looking at deal options and structure, according to people familiar with the situation. But London-based analysts, investors and banking sources believe it will be a struggle to agree a price to suit both groups.
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