Vodafone share price lifted by Liberty tie-up talks

Malone says companies would be ‘great fit’, but analysts see valuation as sticking point

Vodafone share price lifted by Liberty tie-up talks

Vodafone's (LON:VOD) share price jumped more than four percent today after the chairman of Liberty Global, John Malone, reignited long-running merger speculation. The US telecoms tycoon told Bloomberg yesterday night that the companies would make a “great fit”, with a combination between the two creating an integrated mobile and cable industry powerhouse.

"There’s the promise of creating enormous shareholder value if we could work it out," Malone said, declining to comment on whether the groups were in talks. His statement was the most positive made in public by a Liberty executive to date in spite of near constant merger speculation over the last two years.

When asked about Liberty Global at the company’s results presentation yesterday, Vodafone’s chief executive, Vittorio Colao, said that the mobile group would continue to look at acquisitions that “made sense”. According to Jefferies analysts, the comments from Malone indicated a change of tone which could be seen as an attempt to test the reaction of shareholders.

So far today, Vodafone’s shares have been in demand. As of 14:23 BST, the stock was trading 4.78 percent higher at 237.45p. Despite the uplift, analysts at Bank of America Merrill Lynch -- which has previously flagged the strategic logic of a deal due to $20 billion of potential synergies -- remained cautious. The US bank reiterated an 'underperform' rating on the stock, saying that concerns about each company's valuation are likely to be a "major stalling point" for any potential deal, with Vodafone trading at 6.9 times operating profits and Liberty at over 9.0 times.

As of 14:58 BST, Wednesday, 20 May, Vodafone Group plc share price is 236.68p.

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