Acquisitive cable player Liberty Global is being tipped to explore alternative M&A options to boost its European presence, following the breakdown in discussions with Vodafone Group over a long-mooted tie-up.
The high profile talks over a possible asset exchange, which first commenced in June, were officially terminated yesterday after both groups reportedly failed to agree a valuation of their respective businesses.
Market watchers are now speculating as to where Liberty Global’s chairman John Malone, who is known as a prolific deal maker in the market, will turn his attention to next.
Liberty Global does not shy away from investment, and has spent more than $51 billion to expand in Europe over the past decade.
While a content play now seems likely, with UK broadcaster ITV emerging as a potential target given Liberty Global already owns a stake, Malone could also hold interest in smaller-scale European mobile players.
The company bought its first European mobile operator last year after striking a deal to acquire KPN’s Base for €1.3 billion, fuelling speculation over plans to follow up with similar acquisitions.
Both Deutsche Telekom AG’s T-Mobile in the Netherlands, or Sunrise Communications in Switzerland, are being touted as potential suitors.
Liberty Global owns UPC in the Netherlands, the country’s second largest cable operator, and could use a mobile play to beef up its bundled offering in the country.
In Switzerland, “a deal like Sunrise wouldn’t be transformative, but Vodafone is not in Switzerland, and it wouldn’t conflict with any possible deals Vodafone and Liberty Global revisit in the future”, Matthew Harrigan, media analyst at Wunderlich Securities, told Bloomberg.
Vodafone merger could still happen
Indeed, market watchers question whether the deal with Vodafone is a complete no go, given the logic of a tie-up between a high profile mobile operator and a cable group in Europe remains.
The Financial Times reports that both companies are still compelled by a possible deal, while analysts are also speculating whether a potential merger could be on the cards, after the collapse of discussions over an asset swap.
Both companies have been linked with an outright merger, potentially creating a business worth an enterprise value of £120 billion.
“We continue to believe a takeover of Liberty by Vodafone remains a credible scenario,” Jerry Dellis, analyst at Jefferies, is quoted as saying. “The news (of ending talks) will surely disappoint near-term, but we think investors may come to believe that it represents a delay, not the end of the process.”