Vodafone Jumps on Report Activist Investor Cevian Has Built Stake

© Reuters.

By Dhirendra Tripathi

AiVIF.com – Vodafone stock (NASDAQ:VOD) traded 4% higher in London on reports of activist investor Cevian Capital coming to own a stake in the telecom company.

The Nasdaq-listed ADRs were up 0.4%. 

Cevian has been in talks with Vodafone officials in recent months, pushing the carrier to improve performance, according to various reports.

The report said choices before the Swedish investment firm include pushing the British firm to consolidate its presence in key markets, selling some operations or pursuing stock buybacks.

The mobile services firm is present in the U.K., Germany, Italy, Spain and sub-Saharan Africa. It also has a joint venture in India but marked down the value of that business to zero more than two years back due to repeated losses and years of legal disputes that are now over.

At the time of its half-year results in November, Chief Executive Officer Nick Read talked up the company’s hunt to consolidate in its “major European markets”. Vodafone expressed interest late last year in acquiring CK Hutchison’s Three UK unit, Bloomberg reported this month.  Separately, it has also held discussions with Deutsche Telekom (OTC:DTEGY) for a potential merger of their tower businesses.

According to Bloomberg, Cevian avoids public fights to begin with, preferring to build up a stake large enough to ensure that managements are forced to listen. It goes public only in the scenario of behind-the-scenes lobbying not having the desired outcome.

In the first half, Vodafone’s total revenue rose 5% to 22.5 billion euro ($25.2 billion) but profit fell more than 13% to 1.3 billion euro, mostly due to a one-time gain in the previous year.  

Vodafone joins the growing list of British companies witnessing heightened activity from activist investors pushing for changes. Others include Shell (LON:RDSa) and GlaxoSmithKline (NYSE:GSK).