: Vodafone shares slip on stock overhang fears after Optus buy talk

COM) 03/01/01 : STOCKWATCH: Vodafone shares slip on stock overhang fears after Optus buy talk


STOCKWATCH: Vodafone shares slip on stock overhang fears after Optus buy talk
LONDON (AFX) - Shares in market heavyweight Vodafone Group PLC were down
this morning on growing fears that its acquisition strategy may lead to a stock
overhang, dealers said.
At 9.25 am, Vodafone shares were 5-3/4 pence, or 2.4 pct lower at 235-3/4
pence, even though Credit Suisse First Boston reiterated its 'buy' stance on the
stock and it 350 pence price target.
Concerns about a stock overhang have been put in the spotlight by reports
from Australia suggesting that Vodafone Pacific is offering 17 bln aud, or
around 7 bln stg, to buy C&W Optus, which is 52.5 pct owned by Cable & Wireless
PLC.
Analysts said any deal would probably involve the issue of new shares.
Vodafone is also issuing paper to buy Irish mobile phone operator Eircell from
Eircom PLC for 4.5 bln eur. Hutchison Whampoa has also said it is looking to
offload its near 3 pct stake in Vodafone.
The report in the Sydney Morning Herald said the group is offering 11 bln
aud for the mobile phone business, 5 bln for the corporate data business and 1
bln for the consumer and multimedia business.
A takeover of C&W Optus would see Vodafone getting control of 51 pct of the
Australian market, way above the 40 pct level the Australian Competition and
Consumer Commission has usually set as the upper limit.
To get over some regulatory difficulties, analysts say Vodafone would sell
back to C&W the data business and encourage existing resellers to use other
networks.
A deal with Vodafone is a long way from being signed though, analysts said.
Last month Optus said it had received "a number of serious expressions of
interest". Optus was effectively put up for sale in September.
A C&W spokesman would not comment on when any deal was likely to be done but
noted that chief executive Graham Wallace said in November that he hoped a deal
would be done by the end of the financial year on March 31.
C&W shares are down 7 pence at 883 pence.
pp/kl


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