Doubts Emerge On Vodafone Deal With Liberty Global

Vodafone Group Plc (ADR) VOD shares on Monday gave back most of its earlier gains stirred by renewed speculation the company might acquire Liberty Global plc LBTYA.

The rumor surfaced in September via Bloomberg, which cited unnamed sources. Similar, separate stories appeared recently via both Bloomberg and Reuters.

But UBS' Polo Tang said Monday that a deal is "unlikely" until London-based Vodafone's share price is notably higher.

Although acquiring Liberty offers a "clear strategic logic," Tang said in a research note, its size and timing "may be negative for Vodafone investor sentiment."

Back in September, RBC Capital's San Dhillon in a note raised concerns about share dilution that might result from a merger of Vodafone and Liberty.

A deal would benefit Vodafone by boosting its telecommunications market position in Germany, Britain and the Netherlands.

But as for Liberty's controlling shareholder John Malone, "it's not clear why he and co-investors would sell except for a great price," Reuters' columnist Quentin Webb wrote Monday.

"If this is Plan A, Vodafone must have several plan Bs," Webb wrote.

Vodafone's American depositary receipts closed at $35.64, down 2.5 percent; Liberty was off 2.79 percent at $50.54.