Liberty Global’s John Malone Would Only Buy Vodafone With Stock

NEW YORK ( TheStreet) -- If billionaire media mogul John Malone does decide to merge his sprawling international cable-TV company Liberty Global (LBTYA) with the U.K.-based wireless carrier Vodafone (VOD) , it's more than likely the deal wouldbe structured as an all-stock transaction to avoid most taxes, said corporate tax consultant Robert Willens.

Malone, as famous for shaping cable-TV in the U.S. and the world as for his aversion to paying taxes, is said to be considering overtures from Vodafone to combine the two companies, according to a reportfrom Bloomberg News. Vodafone, which operates mobile-telephone service throughout Europe, Asia and parts of South America, is under pressure to acquire fixed-line assets to offset rival BT's (BT) efforts to acquire a wireless provider in the United Kingdom.

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Vodafone covets Liberty Global's extensive broadband network as more media companies offer news and entertainment offerings online that historically have been available only through cable or satellite-TV.Malone, who is also chairman of Liberty Global as well as Liberty Media (LMCA) and Liberty Interactive (QVCA) , has long made acquisitions based in part on whether he could avoid paying taxes.

"If he were to do a deal, it would have to be structured as a tax-free reorganization," said Willens, who worked at Lehman Brothers for 20 years prior to the firm's dissolution in 2008. "That would mean Vodafone would pay in stock, exchanging their shares for Liberty shares in a tax-free merger transaction."

"The reason investors like investing longtime with Malone is because he always rationale, never emotionally attached to any of his businesses," said Amy Yong, a media analyst atMacquarie Securitiessaid in a phone interview from New York. "It will all depend on how a deal is structured, how much voting rights he would have, whether it's cash or stock, tax efficiencies, seats on the board but whenever there's a Malone entity, they've shown they're open to it." Liberty Global's revenue for 2014 is expected to surpass $18 billion on operations that serve roughly 27 million customers in markets that include Germany, the U.K., Chile and Puerto Rico. Its market capitalization is $39.4 billion, just about even with its debt load of $41.1 billion, according to data compiled by Bloomberg. Having sold nearly all of his U.S. cable-TV assets in 1999, Malone has spent more than $40 billion buying pay-TV assets in Europe. A deal would likely pass regulatory hurdles in Europe although some Germany-based assets would likely need to be divested, Ratcliffe added. Requests for comment from Liberty Global and Vodafone weren't immediately returned. Must Read:Starz May Finally Be Sold in Another Killer Deal for John Malone -- Written by Leon Lazaroff in New York Contact by Email. Follow @LeonLazaroff

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Liberty Global's John Malone Would Only Buy Vodafone With Stock