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What: Shares of British cable company Virgin Media (UNKNOWN:VMED.DL) soared 17% today on news that it is in talks with American billionaire John Malone's Liberty Global (NASDAQ:LBTYA) concerning a possible corporate transaction.
So what: Liberty Global has been expanding rapidly in Europe, and a deal with Virgin will allow it to apply those valuable growth lessons in the U.K., one of the continent's largest telecom markets. A tie-up would also put Malone head-to-head against his longtime rival Rupert Murdoch, whose News Corp. (NASDAQ:FOX) owns 39% of Britain's biggest satellite group, BSkyB.
Now what: I wouldn't buy into the buyout buzz just yet. While Virgin Media did issue a press release confirming the discussions, there's still plenty of doubt on Wall Street over Liberty's ability to finance the deal given its already-high debt load. When you couple that uncertainty with Virgin Media's red-hot stock performance over the past several months, staying on the sidelines seems prudent.
Interested in more info Virgin Media? Add it to your watchlist.
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Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.