French tycoon Niel becomes Vodafone's top shareholder in $6 billion deal

French billionaire Xavier Niel is set to become Vodafone Group's largest shareholder after UAE telecoms group e& agreed to sell its entire stake for almost $6 billion.

By Mathieu Rosemain, Hadeel Al Sayegh and Disha Mishra July 10 (Reuters) ‌PARIS/DUBAI - ​French billionaire Xavier Niel is set to become Vodafone Group's largest shareholder, after UAE telecoms group e& agreed to sell its entire stake in the British telecoms group for almost $6 billion. The deal gives one of Europe's most active telecoms dealmakers, who has long championed consolidation in its fragmented industry, the largest stake in Britain's biggest ‌mobile operator. Niel, 58, approached e& directly after spotting an opportunity to build a large position in Vodafone at what he saw as an attractive valuation following a share price decline, and the transaction was agreed within days, a person familiar with the matter said.

E& has been looking to exit investments tied to expansion beyond its core telecoms business, which had weighed on earnings growth, a second person familiar with the matter said. POTENTIAL FOR MORE COST CUTTING SEEN Some analysts expect ‌Niel to seek greater influence over Vodafone's strategy. "We believe the general playbook for Xavier Niel is to buy and hold – and to try to exert influence over the company – and potentially move to full control over ‌time," NewStreet Research said in a note.

Analysts at Berenberg said Niel's investment could accelerate cost-cutting and free cash flow growth at Vodafone, citing the value his Iliad had created at Sweden's Tele2 since acquiring an initial 20% stake in 2024. A spokesperson for Vega, the investment vehicle owned by the Niel family group, said the transaction was a straightforward purchase of e&'s stake and did not include any governance arrangements. The immediate focus is securing the necessary regulatory approvals, including foreign investment clearances, the spokesperson said. Vega said it had struck a binding agreement to buy ⁠the roughly 16.2% stake ​for about £4.4 billion ($5.91 billion), 13% above Vodafone's closing share price ⁠on Thursday. Vodafone has undergone significant restructuring under Chief Executive Margherita Della Valle since she took over in 2023. The group has exited Spain and Italy, sharpened its focus on Germany, Britain and Africa, and completed its merger with Three UK, creating Britain's largest mobile operator.

"Vodafone is ⁠a compelling investment opportunity, underpinned by quality assets, strong brands, leadership positions and a diversified geographic footprint," Niel said in a statement. "As a simpler, more focused business, Vodafone is ready for a new phase of growth and is well-placed to unlock substantial untapped value ​across its European and African operations." Vodafone shares rose 12% to a high of 110 pence in early trade on Friday, while e& shares traded around 4.5% higher.

E& said its exit reflected the "natural ⁠evolution" of its priorities to "sharpen its strategic focus on core businesses" while unlocking cash from the sale. CCS Insight analyst Kester Mann said the move marked a surprising turnaround for e&, formerly known as Etisalat, which bought an initial 9.8% stake in Vodafone in 2022 for $4.4 billion and gradually built ⁠it ​up.

"The announcement indicates that the Middle East company is taking a step back from its strategy to become a global telecom and technology player and now wishes to concentrate on its core businesses." Vodafone welcomed Niel's arrival as its largest shareholder.

"We know the Niel family group well and look forward to engaging with them as a supportive, long-term shareholder," Vodafone said in a statement. Niel first bought a 2.5% stake in Vodafone in 2022 through ⁠a separate vehicle, but that stake has since been sold, according to a spokesperson for Vega. He also sought to acquire Vodafone's Italian business twice over the last few years and was rebuffed on both occasions.

The billionaire ⁠has emerged as one of the leading players in the European ⁠telecoms sector, building up his Iliad from a French challenger into a group spanning France, Italy and Poland. Niel is the second French tycoon in as many years to target a major British telecoms company. Patrick Drahi's Altice group acquired nearly 25% of BT before offloading it to Bharti Global two years ago to cut debt.

($1 = 0.7448 ‌pounds)