Vodafone’s talks with Liberty Global over tie-up collapse

28 Sep 2015 | Author: | No comments yet »

European shares dip, VW loses ground.

Talks to allow the world’s second largest mobile operator, Vodafone, to branch out into broadband and television have broken down without agreement, both sides have confirmed. Virgin Media Finance Plc, which was bought by billionaire John Malone’s Liberty Global in 2013, saw its 460 million euros ($515 million) of January 2025 bonds fall 2.9 cents to 92.8 cents on the euro, the lowest since they were issued earlier this year, according to data compiled by Bloomberg.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.

London – 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. The discussions with cable company Liberty Global, which owns Virgin Media, were first announced in June, when Vodafone said it was considering “an exchange of assets” with the firm.

The pan-European FTSEurofirst 300 index was down 0.1 percent, while the euro zone’s blue-chip Euro STOXX 50 index fell 0.3 percent, with both markets retreating after rising by around 3 percent on Friday. A deal would have allowed both Liberty and Vodafone to converge their resources so each may be better able compete in a European market increasingly leaning towards all-inclusive package offers. Liberty Chairman John Malone, who saw the companies as a “great fit”, said earlier this month they were struggling to progress with the plan, telling Bloomberg that “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”. Virgin Media and Unitymedia are rated at least five levels below Newbury, England-based Vodafone. “The end of the talks is affecting the whole Liberty Global structure as investors expected some of these entities to become part of Vodafone,” said Andrew Wilmont, head of European high-yield investment at Neuberger Berman Group LLC in London, which oversees about $257 billion. “Vodafone is a very strong investment-grade issuer, which would have improved the credit profile of these companies a lot.”

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. The telecoms industry is undergoing a period of merger deals after Britain’s biggest fixed-line (landline) and mobile phone operators, BT and EE, agreed to join forces in February. The companies have never specified which assets were being discussed, but bankers and industry analysts said in June the German and British markets would be the top of the agenda.

Volkswagen shares were among the worst performers in Europe, falling 3 percent after two German newspapers reported on Sunday that Volkswagen’s own staff and one of its suppliers warned years ago about software designed to thwart emissions tests. VW shares have fallen by more than 30 percent 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 SABMiller shares rising 4.1 percent 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. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles.

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