Vodafone ‘primed to acquire Liberty Global’

Liberty Global shares rose sharply yesterday on speculation that Vodafone could use cash freed up by its exit from a Verizon Wireless joint venture in the US to acquire the international cable giant.

Liberty Global shares rose by almost 4% in late trading, peaking at US$79.14 a share before closing at US$78.59, after Macquarie Equities analyst Amy Yong published a note speculating that Verizon could use some of the cash freed up by an agreement to sell its stake in the US venture to bid for Liberty Global.

“Given the need for scale and scarcity of European cable assets, there are likely significant synergies in a Vodafone-Liberty Global combination,” said Yong in the note.

Vodafone and Liberty Global recently competed to bid for Germany cable leader Kabel Deutschland, with Vodafone emerging as the winner. Liberty Global already owns the other major regional operator in Germany, Unitymedia Kabel BW.

The note came after yesterday’s confirmation by Vodafone that it is in talks with US telco Verizon over the sale of its 45% stake in a wireless joint venture. According to recent reports, Verizon could have to pay a massive US$130 billion for the stake.

“Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications Inc. regarding the possible disposal of Vodafone’s US group whose principal asset is its 45% interest in Verizon Wireless,” said Vodafone in a statement. It added that “there is no certainty that an agreement will be reached”.