UPDATE 2-Vodafone says Liberty Global tie-up talks ended

28 Sep 2015 | Author: | No comments yet »

European shares dip as VW, Vodafone lose ground.

London: Talks between Vodafone and Liberty Global about exchanging assets to better compete in Europe’s converging mobile, broadband and TV markets collapsed on Monday because they could not agree on the value of their businesses.

European shares dipped lower on Monday, although Vodafone lagged after ending talks with Liberty Global and carmaker Volkswagen, which has been hit by an emissions data scandal, also declined.When Vodafone confirmed it was talking to Liberty Global, owner of Virgin Media, about a “possible exchange of selected assets,” it suggested that the operator was looking to bulk up ahead of BT’s upcoming EE merger. Vodafone, the world’s second-biggest mobile operator, said in June it was considering swapping some assets with Europe’s biggest cable company, a move that would enable the groups to sell packages of mobile, fixed-line, broadband and television increasingly offered by rivals. The pan-European FTSEurofirst 300 index was down 0.1 per cent, while the euro zone’s blue-chip Euro STOXX 50 index fell 0.3 per cent, with both markets retreating after rising by around 3 per cent on Friday. It’s been several months, but the mobile provider announced today that discussions have been “terminated.” Neither company has given a reason, but Liberty Global chairman John Malone recently indicated that Vodafone would find it difficult to find the money to buy the company outright, even though a broadband consolidation via Virgin Media was most likely on the cards.

Vodafone recently returned to the broadband market, but has seen rivals BT, TalkTalk and Sky all expand their mobile and TV services in the past year. Shares in Vodafone, which had fallen 10 per cent since the talks were revealed in June, were trading down 3.7 per cent at a four-month low of 209.5 pence at 0745 GMT. “Today’s news will surely disappoint near-term, but we think investors may come to believe it represents a delay, not the end of the process,” they said.

But Spain’s constitution does not allow any region to break away, so the prospect remains hypothetical. “Overall sentiment remains negative for now while there is much talk about a squeeze on earnings and lower economic growth in the months ahead,’’ said Peregrine & Black senior sales trader Markus Huber. Virgin Media would have provided the perfect base from which to build a true quad-play offering, but it appears Vodafone will now have to go its own way.

Vodafone is facing an acceleration in convergence in its home market, after Britain’s biggest fixed-line and mobile operators BT and EE agreed to merge earlier this year. VW shares have fallen by more than 30 per cent over the last week after the German company acknowledged installing software in diesel engines designed to hide their emissions of toxic gasses. However, there were signs elsewhere that merger activity remained alive, with SAB Miller shares rising 4.1 per cent after the Sunday Times newspaper reported that Anheuser-Busch InBev SA could bid about $106 billion for SABMiller within days. “We don’t think that merger and acquisition activity will be derailed by the market volatility,’’ said Edouard Petitcollot, senior fund manager at Candriam Investors Group.

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