Vodafone: Asset swap talks with Liberty Global terminated

“On 5 June 2015, Vodafone Group Plc (“Vodafone“) confirmed that it was in the early stages of discussions with Liberty Global Plc (“Liberty Global“) regarding a possible exchange of selected assets between the two companies”.

The talks included Liberty Global’s German cable assets, and cable assets elsewhere in Europe, according to the person close to the matter.

This was seen as a direct response to several other major consolidating deals from rival companies, including BT’s acquisition of EE, Hutchinson Whampoa’s (Three) planned acquisition of O2, and Sky’s own cosy deal with O2.

A source close to the companies is now reporting that the discussions fell apart due to a failure to agree on the value of assets held on both sides. Vodafone’s market cap is $93 billion, or twice that of Liberty’s not least because it carries far less debt than the cabler.

The combination of Liberty Global’s Virgin Media unit with Vodafone United Kingdom would have created a strong quad-play provider better-positioned to compete with a merged BT/EE.

For now, the companies are forgoing what Malone once described as “enormous potential synergies”. The Nasdaq-listed company had been seeking a way to combine its networks with Vodafone’s to offer full bundles of broadband, mobile and television services to consumers.

Analysts had said a tie-up in Britain, where Liberty owns cable and broadband company Virgin Media, would have made sense.

Earlier this month, Nordic carriers TeliaSonera AB and Telenor ASA scrapped the merger of their Danish businesses amid European Union opposition, signaling Competition Commissioner Margrethe Vestager is taking a tough stance on phone carrier combinations.