Liberty Global (Nasdaq: LBTYA) said late Tuesday that it agreed to buy Virgin Media (Nasdaq: VMED) for $23.3 billion in stock and cash.
The deal could see Liberty reach more than 25 million subscribers in 14 countries, eclipsing the 22.3 million subscribers that Comcast (Nasdaq: CMCSA) counted at the end of the third quarter. Liberty is run by cable pioneer John Malone, whose former Tele-Communications Inc. cable systems are now controlled mostly by Comcast.
Liberty said as part of the agreement to buy the British cable MSO, it will "redomicile" from Delaware to the United Kingdom, where it will become a subsidiary of UK plc, a new holding company. But Liberty said it will keep its headquarters in Englewood, Colo., the home of TCI before Malone sold the company to AT&T (NYSE: T) in 1999. The telco later sold its AT&T Broadband cable systems to Comcast.
Virgin reported Tuesday that it counted 4.2 million broadband, 3.8 million pay TV and 4.2 million phone subscribers at the end of the fourth quarter. It picked up 210,000 pay TV subscribers in 2012, and said that the number of "superfast" broadband customers who subscribe to tiers offering speeds of at least 30 Mbps increased by 1.5 million last year.
Liberty said the deal has an equity value of $16 billion and an enterprise value of $23.3 billion, including debt. The combined company will see about $110 million annually in "operating synergies" after the deal closes, the company added.
Under terms of the deal, Liberty said Virgin shareholders will receive $17.50 in cash, 0.2582 Liberty Global Series A shares and 0.1928 Liberty Global Series C shares for each Virgin share that they own. A $5.9 billion cash component of the equity purchase price will be funded through debt financing and available liquidity of both Liberty Global and Virgin, Liberty said. Virgin shareholders will own about 36 percent of Liberty Global stock and have 26 percent of the voting rights.
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