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Vodafone and Liberty Global discuss asset swap

Vodafone confirms it is in the early stages of talks with Liberty Global, but stresses a merger is not on the table

Mobile network operator Vodafone and Liberty Global, the parent company of Virgin Media and Virgin Media Business, have entered into talks regarding a possible exchange of “selected assets” between the two firms.

In a statement, Vodafone confirmed that it had opened discussions with Liberty Global, but stated that there was no certainty that anything would come of it, or what assets, if any, would be involved.

“Vodafone is not in discussions with Liberty Global concerning a combination of the two companies,” said a spokesperson.

Nevertheless, speculation about a possible deal between the two businesses has been bubbling under since December 2014 when, in the wake of the discussions that ultimately led to BT and Hutchison Whampoa buying EE and O2 respectively, Vodafone was thought also likely to try to acquire to better compete with the new entities.

In May 2015, Liberty Global chairman John Malone, who is based in the US, despite his company headquarters having relocated to London, renewed speculation over a possible deal with Vodafone.

Malone said that he saw substantial synergies in western Europe if the two firms were able to find a way to collaborate.

“Is there a great fit in Germany? Absolutely. Is there a great fit in the UK? Absolutely. Is there a great fit in Holland? Absolutely. There’s the promise of creating enormous shareholder value if we could work it out,” he told Bloomberg.

A merger between the two would see the creation of a communications behemoth with sales of more than £80bn, and Vodafone investors are understood to be open to the possibility.

In 2013, Vodafone and Liberty Global got themselves into a bidding war over the assets of German cable TV firm Kabel Deutschland, in which Vodafone ultimately won the day. Liberty Global also owns the assets of German operators Unity Media and KabelBW, and earlier in 2015 bought Belgian mobile operator Base for £950m.

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