Liberty Global, the US cable heavy weight, has agreed to purchase Virgin Media, a large cable and broadband provider in the UK, for $23.3 billion, both companies recently announced in a press release.
If approved by regulators, the deal would make Liberty Global the largest cable and broadband company in the world outside of China. The company will have 25 million subscribers across 14 countries.
“Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we’ve been successfully using for over seven years,” said Mike Fries, President and CEO of Liberty Global. “Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market.
The deal would also put Liberty in direct competition in Europe’s largest pay-for-TV market with Rupert Murdoch’s British Sky Broadcasting, Forbes pointed out.
Liberty Global will purchase Virgin Media at an implied valuation of $47.87 per share, a 24 percent premium to the closing price on February 4. Shareholders of the acquired company will be paid in $17.50 in cash, 0.2582 Liberty A series shares, and 0.1928 Liberty C series shares for each stock held.
Virgin will continue to keep its name and brand under the deal.
“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,” stated Virgin Media CEO Neil Berkett. “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.”
Liberty Global will relocate to the UK while retaining its US headquarters. It will be listed on the NASDAQ as well as the European exchange.
The acquisition isn’t expected to close until the second quarter of this year.