(Bloomberg) -- Vodafone Group Plc shares gained as much as 2.4% on Tuesday after Liberty Global Plc said it had acquired a 4.9% stake in the rival British telecom group, in a surprise bet on Vodafone’s plans to revamp its business.

Liberty Global, which acquired 1.34 billion shares in Vodafone, said in a statement on Monday that it isn’t considering an offer for the Newbury, England-based telecom group. 

Vodafone’s share price has sunk about 30% in the past 12 months, subsequently attracting a number of strategic investors. These include French billionaire Xavier Niel and United Arab Emirates-backed Emirates Telecommunications Group Company PJSC, known as e&, which has slowly increased its position to 13%.

Former Chief Executive Officer Nick Read was ousted in December and his interim replacement, Margherita Della Valle, said the company “can do better” in her drive to return it to growth. 

“We believe, like many others, that Vodafone’s current share price does not reflect the underlying long-term value of their operating businesses, or their announced consolidation and infrastructure opportunities,” Liberty Chief Executive Officer Mike Fries said in the statement. We “fully expect that the equity used to fund this investment will be replenished with the sale of certain non-core assets over time.”

Liberty Global is financing the deal through approximately £225 million ($273 million) in equity funding, it said. A representative for Vodafone declined to comment. 

Vodafone and Liberty are closely entwined historically across Europe’s telecoms industry. They share a 50-50 joint venture in the Netherlands called VodafoneZiggo, and in 2019 Liberty sold Vodafone its German and eastern European businesses for €18.4 billion ($19.7 billion). In the UK, Vodafone competes against Liberty’s half-owned cable and mobile business, Virgin Media O2. 

Deutsche Bank analyst Robert Grindle referenced a popular description of John Malone as a “swamp alligator” in the telecom and media sectors. 

“You don’t see him coming, and then he just surfaces — and off you go,” Grindle said. “There is a wider consensus of hidden value to be released out of Vodafone,” he added, referring to the increasing number of strategic shareholders.

Credit Suisse analyst Jakob Bluestone said Liberty’s move shows that there “seems to be a growing body of shareholders in favor of a breakup of some assets.”

“For Liberty, the deal comes as a surprise as it appears to add to the firm’s headline leverage when its cable footprint is being challenged,” he said. “The deal shows that the sector M&A never loses its ability to surprise.”

--With assistance from Henry Ren.

(Updates with shares in first paragraph, analyst in final. A previous version corrected the number of shares purchased in second paragraph.)

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