Vodafone open to a European tie-up with Liberty Global

The shares of world's largest mobile operator closed at  a 14-year high last week on the heightened speculation after Liberty's billionaire chairman Malone said a much-mooted union would be a "great fit" for his company. As the UK company appears to be in a stronger position to negotiate a deal with the cable group. Vodafone's biggest shareholders point out that they might support a deal with Liberty Global, the company behind Virgin Media and controlled by the US billionaire John Malone.

Speculation surrounding a potential tie-up has continued since lat year but any discussion of the deal has sent Vodafone shares tumbling, on the belief that it would be pay more for Liberty's assets as the acquiring company.

Malone however recently intimated that a merger between the two companies would be more equal in terms of asset sharing..

One anonymous shareholder in Vodafone told Reuters that "There is a strategic rationale to the combination of the assets and until last week, the market assumption had been that Vodafone was coming from a position of weakness. What has changed with John Malone's comments is that the conversation between the two parties might actually be a more equal one." 

After losing ground to competitors in offering "quad play" services (e.g. broadband, home phone, mobile and pay-TV services), Vodafone will be looking to influence Liberty Global cable network if a tie-up surfaces.

Meanwhile, Liberty Global recently bought a mobile player in Belgium that determined a change in strategy after previously suggesting it didn't need to own its own mobile operations and could rent capacity from bigger rivals in the continent.

In an interview, Malone's told Bloomberg that a fusion between both businesses would be "very substantial synergies with respect to western Europe" which led people to speculate that Vodafone could demerge its emerging fast-growth market interests to make it happen.

However, investors do not want to be in a position where Vodafone will be putting pressure on selling its assets in some part of Asia too cheaply.