Vodafone Group Plc Soars After Confirming Verizon Wireless Discussions

Vodafone Group plc (LON:VOD) warns there’s “no certainty that an agreement will be reached” with Verizon Communications Inc.

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Shares in Vodafone (LSE: VOD) (NASDAQ: VOD.US) flew up over 9% this morning, following the confirmation that it is in discussions with Verizon Communications (NASDAQ: VZ.US) over the disposal of its US operations.

The stock smashed through the 200p price point that it’s been flirting with for months now, reaching 207p in early trade — heights last seen over 10 years ago.

Management stated that there was “no certainty that an agreement will be reached”; however, investors will be confident of a positive resolution following Verizon’s long courtship of Vodafone’s share in their joint-venture, Verizon Wireless — a deal that could be worth as much as $130bn.

The money gained from a sale could go towards further acquisitions after Vodafone recently completed the takeover of Kabel Deutschland, as chief executive Vittorio Colao looks to shift the company’s focus towards becoming a ‘one-stop shop’ encompassing mobile, broadband and television.

Verizon has repeatedly stated in public its desire to purchase Vodafone’s 45% stake, while rumours of a merger have persisted despite both camps’ attempts to douse those particular flames. One of the main stumbling blocks for a potential deal has been the heavy taxes that Vodafone might incur from a sale, though Verizon has oft disputed that this would be the case.

At the end of June, analysts at Deutsche Bank were setting a target price of 217p after upgrading Vodafone to a ‘buy’. With a tasty yield of around 5.4%, I’m more than happy to hold my shares and receive dividends while this scenario plays out.

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> Sam owns shares in Vodafone. The Motley Fool has recommended shares in Vodafone.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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