Shares in Vodafone climb 1.9 percent to 233.95 pence in brisk tradeas major investment banks speculate the mobile operator will become a bid targetafter it completes the sale of its stake in U.S. mobile phone company VerizonWireless.
Analysts at BofA Merrill Lynch see U.S. telecoms provider AT&T, whichhas spoken openly about its interest in Europe, as a likely candidate - althoughat the end of January it ruled out a bid for Vodafone in the coming months.
"We see a 50 percent chance that AT&T bids for Vodafone at a 20-25 percentpremium to today's share price," BofA Merrill Lynch says in a note.
BofA Merrill Lynch notes that one way to gain exposure to M&A upside isthrough Vodafone options, noting that Vodafone options become options on thestub on the adjustment at the close on Feb 21.
Vodafone has said its shares would be consolidated on Feb. 24 at the ratioof six new shares for 11 existing shares following the closure of the deal onFriday.
"'New Vodafone'... starts near a sector multiple at 6.1 times, too low inour view," UBS says in a note. "If the market does not realise this value, wewonder if a third party could."
UBS raises its target price on Vodafone to 275 pence, from 260 pence.
Trading volume in Vodafone stands at almost three quarters of its 90-daydaily average, against the FTSE 100 on just a third.
Reuters messaging rm://tricia.wright1.thomsonreuters.com@reuters.net
Vodafone (VOD)