News Column

Will Vodafone payout boost FTSE?

February 20, 2014

By Peter Campbell, Daily Mail, London



Feb. 20--Vodafone last night unveiled the terms of its pounds sterling 51bn payout to shareholders in the wake of selling its US operations.

The pounds sterling 84bn disposal of its 45pc stake in Verizon Wireless has left the group with vast amounts of money. Some pounds sterling 14.6bn in cash will go to shareholders on March 4, while they will also receive pounds sterling 36.7bn in Verizon shares.

The return, the largest in corporate history, leaves many investors facing large tax bills and the complication of whether their broker or bank can hold US-listed shares.

Analysts were speculating whether the return could push the FTSE 100 through the 7,000 mark for the first time in stock market history.

Richard Hunter, head of equities at Hargreaves Lansdown, called the return 'the so-called QE effect'.

He said: 'The chances are the money will find its way back into the market, whether it goes back into Vodafone or whether investors look to replicate another high-yielding FTSE stock.'

'If the majority went back into blue chips it would be positive for the market. Whether that pushes it past the 7,000 mark remains to be seen.'

He said he would use returns from his own shares to buy back into Vodafone, adding that the 'long-term prospects for the business look strong'.

But Paul Kavanagh at Killik, who advised shareholders to put money into other FTSE firms such as National Grid or Berkeley Group, said the money would be widely dispersed. 'Given so many Vodafone shareholders are overseas, there's no chance that would all come back into London,' he said.

Shareholders will receive 0.026 shares in Verizon next week for every share they hold in Vodafone.

Vodafone (down 0.65p at 223.35p) will also consolidate its shares, issuing six new shares for every 11 in circulation currently. This is intended to prevent its share price from halving.

The group is one of the most widely held stocks in Britain, accounting for almost 6pc of the FTSE 100.

Analysts at Citi said around pounds sterling 10bn was likely to be put back into FTSE shares following the payout.

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Source: Daily Mail (London, England)


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