THE MAJOR EVENTS :: Business and Management Studies

THE MAJOR EVENTSThe graphs below summarise the fluctuations in the dish out charge andshareholders returns of Vodafone group, as a result of two majorevents which occurred in mid February, 2004 and mid November of thesame year. On the 22nd 0f January 2004, AT&T Wireless, the third largest mobilephone group in the US, put itself up for sale but as shown above inFig1, this does non seem to have affected the share price or volume of vocation as there was no significant upward or down(prenominal) trend in thesetwo areas. This can lead to an assumption that the foodstuff isinefficient as it did not respond to the randomness or that investorswere not expecting Vodafone to bid for AT&T Wireless because Mr Sarinhad told investors and analysts that he was glad with Vodafonesjoint venture with Verizon, the leading mobile phone operator in theUS.Had Vodafone succeeded in acquiring AT&T Wireless, it would have hadto sell its gainful stake in Verizon back to its partner, VerizonCommunicat ions - a prospect that did not appeal to its shareholdersand so may be why the new information was not relevant to theVodafone.9th February 2004, saw the Vodafone Group Plc announcing that it willcontinue to admonisher developments in the US market and is exploringwhether a potential transaction with AT&T Wireless is in the interestsof its shareholders. This lead to a decrease in share price asinvestors knew that it would mean that Vodafone would have to sell its juicy stake Verizon to buy AT&T Wireless. The steep drop in Fig 1suggests that the market was efficient in its reaction to thisannouncement.The buckram bidding war began on the 13th when Cingular made an initial gap of $30bn, and the offer was matched by Vodafone. Cingular thenraised its bid to $35bn which was again matched by the Britishcompany. When Cingular raised its offer to $38bn, Vodafone once morematched the bid and this suggested to investors that Vodafone would leave too much for AT&T Wireless, which is why the share price droppedeach day till bidding ended on the 17th. On 17th February 2004,Vodafone withdrew from the auction when it concluded that it was nolonger in its shareholders exceed interests to continue discussions.We can see that there was a 5% growth in the share price when thiswas announced, and the volume of trading shows the marketsinformational efficiency Since watchword emerged that Cingular had made aninformal offer in mid-January, Vodafones shares have underperformedthe rest of the market, naked the value of the company by more than