The acquisition will be carried out through Vega, an acquisition vehicle wholly owned by the Niel family group, which has agreed to buy e&’s 3.9 billion shares at £1.104792 each. Physical settlement is expected by the end of the year once regulatory approvals are obtained.

Vega has confirmed under Rule 2.8 of the Takeover Code that it does not intend to make an offer for the whole of Vodafone, though it reserved the right to set that restriction aside in certain circumstances, including with the agreement of the Vodafone board or if a third party announces a firm offer.

Niel described Vodafone as a compelling investment underpinned by quality assets, strong brands and a diversified footprint, pointing to his record as a minority investor in listed companies including Tele2 and Millicom.

Kester Mann, director, consumer and connectivity at CCS Insight, said the move marks a surprisingly sudden exit for e&, which took an initial 9.8% stake in Vodafone in 2022 and had steadily built up its share since. He said the announcement indicates the Middle East operator is stepping back from its strategy to become a global telecom and technology player, and now wishes to concentrate on its core businesses.

Mann noted that Niel’s ownership of Iliad, the disruptive European telco that upended the French mobile market when it launched as a fourth operator in 2012 and now has more than 40 million customers across France, Italy, Poland and Ireland, means a full takeover of Vodafone is not on the cards. However, he said it will be interesting to see how influential Niel wishes to become, adding that his ambitions in AI and cloud services could support Vodafone’s enterprise strategy.

Vodafone should still benefit from its existing strategic alliance with e&, Mann said, which appears to remain in place despite the sale and covers areas including enterprise, security, procurement and technology.

He described the deal as the latest structural change for Vodafone, which has transformed under chief executive Margherita Della Valle, selling out of struggling markets including Spain and Italy and securing its merger with Three in the UK. It will be interesting to see whether the deal shapes the operator’s strategy going forward, he added.

Vega said it will shortly initiate contact with the UK government over the proposed investment. The Niel family group is the largest private investor in European telecoms, with businesses spanning 26 countries, 139 million subscribers and €24 billion of annual revenue.

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