Vodafone's Liberty Global Deal Gets EU Nod -- Update

(Adds responses from Vodafone and Liberty Global, background)

--The European Union's antitrust body has cleared Vodafone's acquisition of Liberty Global assets in Europe with conditions

--Vodafone offered remedies, including a wholesale agreement with Telefonica Deutschland, to ease regulators' concerns

--The deal is now expected to close on July 31

By Adria Calatayud

The European Union's antitrust authority has cleared Vodafone Group PLC's (VOD.LN) acquisition of some assets from Liberty Global PLC (LBTYA), paving the way for a multibillion-euro deal that is set to reshape the European telecoms market.

The European Commission said Thursday that remedies offered by Vodafone, including a wholesale agreement with Telefonica Deutschland AG (O2D.XE), addressed its competition concerns.

After the regulatory approval, Vodafone's acquisition of Liberty's assets in Germany, Hungary, Romania and the Czech Republic is now expected to be completed by July 31, both companies said in separate statements.

The deal strengthens Vodafone's presence in Germany--its largest market--and creates a continental giant offering cable, internet, wireless and landline-phone services. Meanwhile, John Malone's Liberty will receive a cash windfall at a moment when telecom operators are investing in the roll-out of next-generation 5G networks.

"With the European Commission's approval of this transaction, Vodafone transforms into Europe's largest fully-converged communications operator, accelerating innovation through our gigabit networks and bringing greater benefits to millions of customers," Vodafone Chief Executive Nick Read said.

Liberty welcomed the regulator's decision and said the deal leaves the company with a significant cash balance. Liberty will continue to operate in the U.K., Ireland, Belgium, Switzerland, Poland and Slovakia, it said.

In addition to the pact with Telefonica Deutschland--which gives Telefonica access to the merged entity's cable network in Germany--Vodafone committed to refrain from contractually restricting broadcasters carried on the merged entity's TV platform from also distributing their content via an over-the-top service.

Vodafone also proposed not increasing the feed-in fees paid by free-to-air broadcasters for transmission via Vodafone's cable network in Germany and to continue to carry their signal, the commission said.

EU regulators in December said they had opened an in-depth investigation into the deal, as the European Commission was concerned the acquisition may reduce competition in Germany and the Czech Republic.

Vodafone agreed to buy the Liberty Global operations in May last year. Liberty said the deal has a total enterprise value of 19 billion euros ($22.5 billion at the time) based on U.S. accounting rules, while Vodafone valued it at EUR18.4 billion using international standards.

The acquisition put pressure on Vodafone's balance sheet, leading the company to cut its full-year dividend by 40%, streamline its portfolio through deals such as the $2.2 billion sale of its New Zealand arm and pursue network-sharing agreements with rival operators like Telefonica SA's (TEF.MC) O2 in the U.K.

Vodafone shares rose on news of the EU approval and at 1147 GMT traded 0.9% higher at 127.20 pence, having fallen nearly 44% since the deal was agreed.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

July 18, 2019 08:04 ET (12:04 GMT)

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