US-based cable operator Liberty Global said late on Tuesday that it would acquire Virgin Media in a stock and cash merger valued at US$23.3 billion, eyeing key strategic markets in Europe.
The deal hopes to create “the world’s leading broadband communications company,” which would cover 47 million homes and serve 25 million customers in 14 countries, the two groups said in a joint statement.
It said the new company would focus on “the strongest and most strategic markets in Europe, with the scale to be at the forefront of technological change for customers.”
The companies hailed what they called “complementary strengths across product suite, with aligned triple-play products, roadmap and expertise across digital TV, broadband and telephony services.”
Meanwhile, “Mobility and B2B [business-to-business] expertise offer significant additional growth potential in key markets,” they said in a statement.
According to the terms of the agreement, Virgin Media shareholders will receive for each share of the UK-based firm US$17.50 in cash, 0.2582 Liberty Global Series A shares and 0.1928 Liberty Global Series C shares.
The transaction implies a price of US$47.87 for each Virgin Media share, a 24 percent premium over Virgin Media’s closing price on Monday.
Liberty Global shares lost 2.27 percent to close at US$67.88 on Tuesday and dropped 0.75 percent to US$67.37 in after-hours trading.
Virgin Media has approximately 7 million customers in Britain, where it provides broadband Internet, telephone, television and mobile phone services. Its main competitor is pay-TV satellite broadcaster BSkyB, in which Rupert Murdoch’s News Corp owns a 40 percent stake.
“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,” Liberty Global president and CEO Mike Fries said.
“Virgin Media 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.
“Virgin Media and Liberty Global have a shared ambition, focus on operational excellence and commitment to driving shareholder value,” Virgin Media chief executive officer Neil Berkett said. “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.”
The group was created from merging the British assets of US cable operator NTL and rival Telewest, and the purchase of mobile phone group Virgin Mobile in 2006.
Active in 13 countries, including 11 in Europe, Liberty Global bought up the No. 2 and No. 3 cable operators in Germany in 2010 and 2011 — Unitymedia and Kabel BW.
However, it announced last month that it was abandoning its initial public offering for tiny Belgian rival Telenet after only being able to raise 58.3 percent of the capital.