Cable TV operator buys U.K.-based Virgin Media for $16 billion
Purchaser Liberty Global has international pay-TV operations, largest operator in its 11 European markets
Owned by media mogul John Malone, Liberty Global Inc., is buying the U.K.-based Virgin Media Inc. in a deal valued at $16 billion. Announced earlier this week, the decision creates a company that will provide stiffer competition in the U.K. to satellite TV provider BSkyB, in which Malone's rival Rupert Murdoch's News Corp. owns a 40 percent stake.
Virgin Media remains the second-biggest pay TV Company in the U.K. after BSkyB, or British Sky Broadcasting Group PLC.
Liberty Global has international pay-TV operations and is the largest cable operator in most of its 11 European markets.
Liberty Global's Chief Executive Officer Mike Fries said that after the deal, about 80 percent of the company's revenue will come from five countries: the U.K., Germany, Belgium, Switzerland and the Netherlands. The two companies said they had combined revenue of $16.8 billion last year.
Virgin Media remains the second-biggest pay TV Company in the U.K. after BSkyB, or British Sky Broadcasting Group PLC. Virgin Group boss Richard Branson - a multi-billionaire in the manner of Malone and Murdoch will still hold a minority stake.
The companies said the transaction is equal to $47.87 per Virgin Media share. That's about a 24 percent premium on the closing price of Virgin Media's U.S.-traded stock at the beginning of this week.
The stock surged almost 18 percent Tuesday to close at $45.61 after the company said it was in acquisition talks with Liberty Global.
Liberty Global will remain based in Colorado, while Virgin Media will continue to operate under its namesake brand in the UK. In addition, Virgin Media shareholders are set to get about 36 percent of Liberty Global's outstanding shares and about 26 percent of the voting rights.
They added that they expect about $180 million in annual costs savings once they are fully combined. They didn't say whether any of their employees will be laid off as part of the cost cutting.
Liberty Global also said it plans to buy back about $3.5 billion worth of its shares over a two-year period after the Virgin Media deal is closed.
© 2013, Distributed by NEWS CONSORTIUM.
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