What an Asset Swap Could Mean for Liberty and Vodafone

By Chris Lange Published Jun 5, 9:20AM EDT

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Vodafone Group PLC (NASDAQ: VOD) and Liberty Global PLC (NASDAQ: LBTYA) are currently in talks concerning how they can help each other out through an asset swap. Each company is looking to gain position on the European front, but it is a matter of figuring out how.

Both companies are denying allegations that they are looking to merge or combine. In fact, they each have larger aspirations on their own.

The deal mainly concerns networks within Germany and the United Kingdom. It would appear that Vodafone’s main interest would lie in the acquisition of Liberty’s Virgin Media arm in the United Kingdom. At the same time, Liberty would to takeover Vodafone’s German cable business.

The question is whether these companies are just going to swap assets or have an outright merger. Either way, the companies are currently involved in talks about what might be the best path going forward.

Liberty has been looking to pick up cable operators in Europe, and Vodafone would be a key step in this process. Vodafone is currently in control of the second largest cable provider in Germany and has a large footprint across Europe.

In the previous month, Liberty agreed to acquire its own mobile business to combine with existing cable operations through an offer for the Belgian segment of KPN.

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According to The Wall Street Journal:

Talk of a Vodafone-Liberty deal in some form is nothing new, but analysts say tough trading for Vodafone in recent times — and a multibillion-dollar capital spending effort aimed at its networks — has raised pressure for a tie-up between the groups.

Shares of Liberty closed Thursday up 2.2% at $54.60, in a 52-week trading range of $39.95 to $58.66. The stock has a consensus analyst price target of $59.80.

Shares of Vodafone closed Thursday down 1.4% to $37.71. In premarket trading Friday, shares were down an additional 1% to $37.34. The stock has a consensus analyst price target of $36.79, in a 52-week trading range of $28.63 to $39.46.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.