Vodafone merger remains high on Malone wish list, Reuters says

After entering into a joint venture in the Netherlands with Vodafone in February, John Malone and his Liberty Global PLC are keen to make an even bigger move in Europe, Reuters reports — one as big as merging with Vodafone itself. 

Combining the operations of the two companies would create Europe's biggest communications company.

But the acquisition would be challenging, Reuters notes. London-based Vodafone, the second biggest wireless company in the world, has a market cap of $88 billion and a very different approach to dealmaking compared to Liberty. 

For Malone, fulfilling his usual preference for large chunks of voting rights in an acquired company would be difficult to come by. 

"John would like to do something in Europe, but he doesn't know what to do and is reluctant to give up his super votes which would be the case with Vodafone," an unnamed industry executive who reportedly knows Malone told Reuters.

"There aren't many deals out there," the executive added. "There's smallish things they could do but nothing that is transformative. Deal guys get frustrated when there aren't any deals to do."

Adding to the intrigue is the fact that Britain's second largest wireless operator, O2, is back on the market, with regulators blocking an acquisition by CK Hutchison last month. Reuters notes that O2, which is owned by Spain's Telefonica, could be used as a bargaining chip for Malone. 

"If Vodafone felt that Liberty was serious (about looking at O2) they'd probably come back to the table," a top 10 Vodafone investor told Reuters.

In February, Vodafone agreed to pay Liberty $1.12 billion to combine the two company's operations in the Netherlands. 

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