Liberty Global chairman likens Vodafone talks to a tennis match

Liberty Global chairman John Malone admitted the company is no closer to agreeing on an asset swap with UK-headquartered Vodafone after around three months of talks.

Malone told Bloomberg that discussions to date have failed to identify realistic goals that would generate suitable value for the shareholders of either company. However, the media company's chairman said talks with Vodafone executives are ongoing in an attempt to agree a structure that the pair could present to their shareholders.

While Malone admitted that Liberty Global could itself be acquired by Vodafone, he told Bloomberg such a move is unlikely.

That statement suggests the companies are more focussed on a potential asset swap or a combination of their businesses in Western Europe -- both of which are options sources told Bloomberg were being discussed in June, when Vodafone confirmed talks with Liberty Global were taking place.

At the time, the mobile operator said a full merger was not an option being discussed.

In his recent interview, Malone told Bloomberg the companies were seeking ways that they could "live together", and likened the discussions to a tennis match, with ideas being bounced to and fro between the companies' executives.

The benefits of a tie-up between the companies would centre on access to TV and mobile services: Vodafone would leverage Liberty Global's media portfolio to become a true 'quad play' provider, with Liberty Global attaining a similar goal through access to Vodafone's extensive global mobile networks, in particular in Germany and the Netherlands.

A particular boon for Vodafone would be Liberty Global's Virgin Media division in the UK, where the company risks being sidelined by the proposed merger of Three UK and O2 UK, and BT's move to acquire EE.

Despite Vodafone's resistance to a full merger with Liberty Global, Jefferies International analysts have previously noted that such a deal would make more sense than a swap of assets in Western Europe. The latter option would not deliver the level of synergies that a full combination would offer, the analysts said, adding that a combined entity would offer a "premium trading multiple" compared to an "unwieldy joint venture."

For more:
- see this Bloomberg article

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