Liberty Global is set to acquire UK-based Virgin Media in a stock and cash merger valued at about US$ 23.3 billion creating one of the world’s leading broadband communications company covering 47 million homes and serving 25 million customers across 14 countries.
Under the deal, each Virgin Media shareholder will receive $17.50 in cash, 0.2582 Liberty Global Series A shares and 0.1928 Liberty Global Series C shares for each Virgin Media share that they hold. This implies a $47.87 per Virgin Media share, reflecting a 24% premium to Virgin Media’s closing price on February 4, 2013.
With the takeover, Liberty Global will be creating a new holding company, a UK plc, cementing its position as Europe’s leading cable operator. But the Virgin brand will be maintained in the UK.
Mike Fries, President and CEO of Liberty Global, said adding Virgin Media to Liberty Global’s European operations will add significant scale and a first-class management team in Europe's largest and most dynamic media and communications market.
“After the deal, roughly 80% of Liberty Global's revenue will come from just five attractive and strong countries — the UK, Germany, Belgium, Switzerland and the Netherlands," he said, adding that the merger will yield meaningful operating and capex synergies of approximately $180 million per year upon full integration.
“Virgin Media's market leading innovation and product expertise, particularly in mobile and B2B, will accelerate our own development of these business segments," he said.
Once the deal is approved by shareholders, the majority of Liberty Global’s revenues will come from five countries; the UK, Germany, Switzerland, the Netherlands, and Belgium. Liberty Global also controls the vast majority of cable networks in the Republic of Ireland.
Virgin Media CEO Neil Berkett said that over the past six years, Virgin Media has transformed the digital experience of millions of customers, catalyzed a deep-rooted change in the UK’s digital landscape and delivered impressive growth and returns for our shareholders.
“I’m confident that this deal will help us to build on this legacy. Virgin Media and Liberty Global have a shared ambition, focus on operational excellence and commitment to driving shareholder value. The combined company will be able to grow faster and deliver enhanced returns by capitalizing on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.”
Virgin Media was formed by the merger of cable operators NTL and Telewest in February 2007, which consolidated UK cable. With Virgin Mobile, Virgin Media employs 14,000 people in the UK, including 2,000 in Scotland. NTL was established in 1991 as an investment vehicle under the name International Cabletel.
Reports from Europe say Sir Richard Branson has welcomed Virgin Media’s take over by US cable giant Liberty Global, describing the deal as “good news for the company, its customers and our people.” The entrepreneur’s Virgin Group owns about 3 percent of the cable television and telecoms firm.
Earlier this week, Virgin Media reported an increase of 2.7 percent total revenues for 2012 $7.38 (£4.1) billion and a net income of £2.7 billion compared to £48.2 million in the fourth quarter last year.
