A combination of Vodafone and Liberty Global would be a “great fit” for the latter, according to Liberty chairman John Malone.
Malone, interviewed by Bloomberg yesterday, said that an agreement to work together or a combination of the two companies could deliver “very substantial synergies” and cited the benefits of a merger in markets including Germany, the UK and the Netherlands.
However he highlighted significant differences in approach to capitalisation between the pair as a potential obstacle to a deal. Malone said that while Vodafone is focused on a low-risk approach, keeping debt under control and delivering cash returns to shareholders, he preferred “to grow equity value”.
Malone also told Bloomberg that Liberty Global could buy more mobile operators where it had scale, such as in the Netherlands, following Liberty Global-backed Telenet’s acquisition of low-cost mobile player BASE in Belgium.
In a conference call with analysts following Vodafone’s full-year results, Vodafone CEO Vittorio Colao, asked about the possibility of Liberty Global acquiring Vodafone rather than the reverse, said that this was “a question for [Liberty Global CEO] Mike [Fries], not for me” and commented that such a transaction would command “a big price”.
On the question of the combination of Vodafone and Liberty Global generally, he said that such a deal would be “a matter of synergies and…convergence relative to market needs”. He said that it made sense in some markets but possibly not in others and that it would be necessary to “judge whether the price reflects both”.
Vodafone has a current market value of around US$93 billion (€83 billion), while Liberty Global is valued at around US$45 billion.
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