By Mathieu Rosemain and Disha Mishra
July 10 (Reuters) - 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 the continent's fragmented industry, the largest stake in Britain's biggest mobile operator.
Vega, the acquisition vehicle wholly owned by the Niel
family group, said it had struck a binding agreement to buy the roughly 16.2% stake for about £4.4 billion ($5.91 billion).
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.
Vega will become Vodafone's top shareholder upon the closing of the transaction and necessary approvals.
"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 deals on Friday.
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.
"They recognise the quality of our diversified operations and have confidence in the new chapter of Vodafone's growth," the company said.
EUROPE'S LEADING TELECOM CONSOLIDATOR
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 most prominent players in the European telecoms sector, building up his Iliad from a French challenger into a group spanning France, Italy and Poland through acquisitions including Play and UPC Polska.
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)
(Reporting by Disha Mishra in Bengaluru and Mathieu Rosemain in Paris;Additional reporting by Paul Sandle, Federico Maccioni, Hadeel Al Sayegh, Supantha Mukherjee, Sudip Kar-GuptaEditing by Subhranshu Sahu and Tomasz Janowski)
