On Wednesday Liberty Global (NASDAQ:LBTYA) announced that it would purchased Britain’s second largest subscription television provider, Virgin Media (NASDAQ:VMED).
Under terms of the acquisition, Liberty will pay $47.87 a share for Virgin, about $16 billion in cash and stock. Including Virgin’s debt, the deal is valued at about $23.3 billion, and marks the largest media acquisition since the Thomas Reuters merger in 2007, Bloomberg noted.
Investors appeared wary of the deal. Shares of Liberty Global and Virgin Media fell about 3% and 2%, respectively, in Wednesday morning trading.
The purchase puts Liberty in direct competition with News Corp.‘s (NASDAQ:NWSA) BSkyB, the United Kingdom’s biggest pay TV service, pitting two telecommunications billionaires, Liberty’s John Malone and News Corp.’s Rupert Murdoch against each in the European subscription TV market.
Liberty controls subscription TV services in other European countries. After the acquisition of Virgin, it will derive roughly 80% of its revenue from Britain, Switzerland, the Netherlands, Belgium and Germany. After the merger, Virgin shareholders will own about 36% of the combined entity’s shares, but just 26% of voting rights.
Virgin shares had surged about 16% in Tuesday trading on rumors of the impending deal.