German competition watchdog the Bundeskartellamt’s move to have the EC refer Vodafone’s planned acquisition of Unitymedia to was “totally expected and not a surprise at all” for Unitymedia parent Liberty Global and the company remains confident that the deal will be approved, according to president and CEO Mike Fries.
Speaking to analysts after Liberty posted its quarterly results at the end of last week, Fries said that the proposed transaction “is exactly the sort of deal that the European Commission was created to handle”.
Fries said that the agreement was a cross-border deal that concerned two large multinational organisations and made the point that the EC had “reviewed every large cable-to-cable and cable-mobile transaction over the past five years”, with Liberty being involved in a number of these.
He indicated that he believed the Commission would be broadly supportive of the deal, saying that both Vodafone and Liberty had “a very strong view” about the Bundeskartellamt’s intervention and “we believe the Commission does as well”.
Fries also gave his strongest indication to date that proceeds from the sale would be used to buy back stock and provide a return to shareholders. He said that Liberty was “puzzled” and “certainly not pleased with our stock price today” and that “at these price levels” the sale “would unleash opportunity to reduce the equity”. However, he added, Liberty would also be open to “look at other value creation opportunities in seven or eight months”.
Fries said that following the sale of UPC Austria and the planned sale of assets to Vodafone, Liberty next year “will be smaller in scope and scale” and that the company was in the middle of a process to “rescale the central part of the business to reflect that”.
he said that Liberty Global had no plans for any transaction involving the star performer in its asset portfolio – the UK’s Virgin Media. He said the UK was “a great market” and that the company was under “no pressure to do anything strategically in the UK”, something that may not be the case in other markets where the operator is challenged, such as Switzerland.
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