Liberty Global chairman John Malone threw fresh doubt over a possible asset exchange with Vodafone, despite months of ongoing talks, after conceding the companies still haven’t worked out how to progress with the deal.
Talks between the two blockbuster companies began in June, when Vodafone said it was in the “early stages” of informal discussions to swap certain assets with the cable group, without naming the units that could be involved.
In an interview with Bloomberg, Malone compared discussion with Vodafone as a “tennis match” of ideas, but conceded that there was still no proposed structure in place to pitch to shareholders.
“Conceptually there could be some real value created, but realistically we haven’t been able to figure out a way to do that that’s mutually successful,” he said. “That doesn’t mean that we won’t find a solution, nor does it imply that we will.”
As talks began, sources suggested the companies could consider a range of possible transactions, including a combination of their western European businesses, or a full merger between the cable and telecoms giants, although Vodafone said at the time it was not pursuing discussions over the latter.
Malone said it he didn’t believe it was likely “for the other side (Vodafone)” to match the price at which Liberty Global could be bought for.
“Other than an outright purchase of the whole company, it’s a question of figuring out some way to live together,” he said.
A combination of assets
Vodafone and Liberty Global combined have more than $80 billion in revenue, and approximately $130 billion in market capitalisation.
It is thought that a deal between the two could seriously impact the landscape of the European telecoms market, given the companies’ interests in both telecoms and cable respectively.
A deal however seems attractive for both sides. While Vodafone could potentially lessen its business’ reliance on some highly competitive European markets, Liberty Global’s play is part of a shirt towards beefing up its telecoms and wireless offerings.
The companies also have complimentary businesses in numerous European countries, including UK, Netherlands and Germany, which could lead to more bundled offerings.
Market watchers have also suggested Vodafone could cede control of its businesses in the UK and the Netherlands, instead taking control of Liberty Global’s German operations.
Rival Deutsche Telekom has already said it would oppose any merger between the two companies in Germany, and any combination is set to face tough antitrust scrutiny.