Telecom equities were the best performers of the day on Wednesday as M&A speculation continues to boost stocks in the wake of one of the biggest corporate deals in history between Vodafone and Verizon.
The UK mobile-phone giant announced on Monday that it had reached an agreement with its US partner to sell its 45% stake in their joint venture, Verizon Wireless, for a total consideration of $130bn (£84bn).
Vodafone shareholders will receive $60.2bn in Verizon shares
through the deal in addition to $23.9bn of cash totalling $84bn - equivalent to 112p per share and representing 71% of the net proceeds. Vodafone also said it would raise its full-year dividend per share by 8% and continue to increase it annually thereafter.
While Vodafone's hefty cash return to investors reduces its firepower for large M&A deals, it still has around £25bn of headroom to "build on its convergence presence", said Nomura analyst James Britton in a research note yesterday.
Such speculation has prompted a strong rise in the share price of FTSE 250 internet and phone network firm TalkTalk in the last few days on rumours in the press that it could be a target of its larger rival. The stock was up a further 1.1% this afternoon.
In contrast, Britton also said: "Vodafone's de-coupling from Verizon in the US, its European mobile footprint and its accelerated investment strategy could catch the eye of other global consolidators like AT&T," citing an article from Bloomberg earlier in the week.
Vodafone was trading 1.7% higher on Wednesday.
On the other end of the scale, small-cap AIM firm Pinnacle Technology was extending gains after rocketing yesterday following the announcement by Coms that it was considering taking over the business services group. Coms, which itself is focused on hosted business-phone systems, said on Tuesday it was "considering a possible corporate transaction with Pinnacle that could result in an offer".
Meanwhile, mobile banking and payments group Monitise surged today after announcing two new deals, one of which is that it is teaming up with US tech group IBM to help Visa Europe accelerate new mobile commerce services in the cloud.
Separately, Monitise also said it is to partner with Card Services for Credit Unions (CSCU) to offer its products to over 2,600 member credit unions.
Top performing sectors so far today
Mobile Telecommunications 4,796.14 +1.45%
Industrial Metals & Mining 1,514.60 +1.18%
Industrial Transportation 3,183.58 +0.84%
Fixed Line Telecommunications 3,879.90 +0.30%
Real Estate Investment & Services 2,453.77 +0.22%
Bottom performing sectors so far today
Household Goods & Home Construction 9,945.09 -1.89%
Food Producers & Processors 6,739.08 -1.84%
Travel & Leisure 6,457.62 -1.45%
Life Insurance 5,943.59 -1.33%
Food & Drug Retailers 4,630.51 -1.28%