Liberty Global to Buy Virgin Media for $16B

by Christopher Freeburn | February 6, 2013 9:53 am

Liberty Global to Buy Virgin Media for $16B

virginmedialogo 300x212 Liberty Global to Buy Virgin Media for $16B[1]On Wednesday Liberty Global (NASDAQ:LBTYA[2]) announced that it would purchased Britain’s second largest subscription television provider[3], Virgin Media (NASDAQ:VMED[4]).

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[5]) 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[6].

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[7].

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2013/02/virginmedialogo.jpg
  2. LBTYA: http://studio-5.financialcontent.com/investplace/quote?Symbol=LBTYA
  3. would purchased Britain’s second largest subscription television provider: http://www.bloomberg.com/news/2013-02-06/liberty-global-to-acquire-virgin-media-for-23-3-billion.html
  4. VMED: http://studio-5.financialcontent.com/investplace/quote?Symbol=VMED
  5. NWSA: http://studio-5.financialcontent.com/investplace/quote?Symbol=NWSA
  6. against each in the European subscription TV market: http://investorplace.com/2013/02/billionaire-john-malone-makes-a-power-move/
  7. rumors of the impending deal: http://investorplace.com/2013/02/liberty-in-talks-to-buy-virgin-media/

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