Deal may pit Liberty against Murdoch
Source: Agencies |
February 7, 2013, Thursday
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Print Edition
Print Edition
JOHN Malone's Liberty Global has struck a deal to buy British cable group Virgin Media for about US$15.75 billion in stock and cash, a move that would put the US billionaire up against old rival Rupert Murdoch.
The companies announced the deal in a statement after Virgin Media, the second-biggest pay-TV provider in Britain behind Murdoch's satellite group BSkyB, confirmed Liberty's approach on Tuesday.
Including debt, the deal would be worth more than US$23 billion and would give Liberty entry to one of Europe's biggest and most competitive telecommunication markets, allowing it to apply lessons learned as a pay-TV and broadband provider in 11 other European countries.
It would also put Malone's Liberty in a strong position to challenge Murdoch as cable groups across the region start to assert their authority over traditional telecoms firms with the offer of super-fast broadband and pay-TV.
Liberty will pay about US$47.02 for each Virgin Media share based on Tuesday's closing prices, using cash and shares of its class A and C stock. Before news of the bid emerged in a Financial Times report on Monday, the bid represented a 24 percent premium to where Virgin Media's shares had been trading.
Malone, whose group has 19.6 million customers, came up against Murdoch a decade ago when Murdoch's News Corp and Liberty Media vied for control of DirecTV Group, the largest US satellite TV broadcaster.
The stand-off ended when both sides backed down. News Corp sold its one-third stake in DirecTV to Malone's group and Malone sold 16 percent of News Corp that Liberty had acquired, giving the Murdochs fuller control over their company.
Dubbed everything from the Cable Guy to Cable Cowboy and even Darth Vader by former US Vice President Al Gore because of his perceived ruthless style, Malone made his fortune through a series of deals that transformed, and ultimately consolidated, the US cable industry into one dominated by a few big players.
Murdoch's BSkyB leads the British pay-TV market with 10.7 million customers compared with Virgin Media's 4.9 million.
Virgin Media emerged two years ago from years of heavy losses from a costly network expansion. But its cables still only cover half of Britain and analysts see potential for more growth.
For Liberty, those benefits must be weighed against the debt a takeover with cash and stock may entail.
Under the terms of the deal, Virgin Media shareholders will receive US$17.50 in cash, 0.2582 Liberty Global class A share and 0.1928 Liberty Global class C share for each Virgin Media share.
The companies announced the deal in a statement after Virgin Media, the second-biggest pay-TV provider in Britain behind Murdoch's satellite group BSkyB, confirmed Liberty's approach on Tuesday.
Including debt, the deal would be worth more than US$23 billion and would give Liberty entry to one of Europe's biggest and most competitive telecommunication markets, allowing it to apply lessons learned as a pay-TV and broadband provider in 11 other European countries.
It would also put Malone's Liberty in a strong position to challenge Murdoch as cable groups across the region start to assert their authority over traditional telecoms firms with the offer of super-fast broadband and pay-TV.
Liberty will pay about US$47.02 for each Virgin Media share based on Tuesday's closing prices, using cash and shares of its class A and C stock. Before news of the bid emerged in a Financial Times report on Monday, the bid represented a 24 percent premium to where Virgin Media's shares had been trading.
Malone, whose group has 19.6 million customers, came up against Murdoch a decade ago when Murdoch's News Corp and Liberty Media vied for control of DirecTV Group, the largest US satellite TV broadcaster.
The stand-off ended when both sides backed down. News Corp sold its one-third stake in DirecTV to Malone's group and Malone sold 16 percent of News Corp that Liberty had acquired, giving the Murdochs fuller control over their company.
Dubbed everything from the Cable Guy to Cable Cowboy and even Darth Vader by former US Vice President Al Gore because of his perceived ruthless style, Malone made his fortune through a series of deals that transformed, and ultimately consolidated, the US cable industry into one dominated by a few big players.
Murdoch's BSkyB leads the British pay-TV market with 10.7 million customers compared with Virgin Media's 4.9 million.
Virgin Media emerged two years ago from years of heavy losses from a costly network expansion. But its cables still only cover half of Britain and analysts see potential for more growth.
For Liberty, those benefits must be weighed against the debt a takeover with cash and stock may entail.
Under the terms of the deal, Virgin Media shareholders will receive US$17.50 in cash, 0.2582 Liberty Global class A share and 0.1928 Liberty Global class C share for each Virgin Media share.
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