Shares in Virgin Media (Nasdaq: VMED) jumped nearly 17 percent Tuesday morning after the British cable MSO confirmed it is negotiating a "possible transaction" with Liberty Global (Nasdaq: LBTYA), the international cable company founded by U.S. cable pioneer John Malone.
Liberty is close to finalizing a $20 billion acquisition of Virgin Media, the second largest pay TV distributor in the U.K. behind BSkyB, according to Reuters. Virgin counted about 4.8 million cable customers at the end of the third quarter. It was one of the first cable operators to supply TiVo (Nasdaq: TIVO) DVRs to subscribers and has distributed more than 1.2 million of the devices.
Liberty Global has also increased its focus on deploying advanced products. Last fall it began rolling out Horizon TV, a hybrid TV/Web platform that runs on video gateways from Samsung, middleware and a user interface from NDS and a video-on-demand system from SeaChange International (Nasdaq: SEAC). Horizon is similar to Comcast's (Nasdaq: CMCSA) Xfinity X1 product.
Acquiring Virgin would be the biggest deal yet for Liberty Global, which is the largest cable MSO in Europe. Virgin said it would make an additional announcement about the deal "in due course."
"Virgin Media confirms that it is in discussions with Liberty Global, Inc., a leading international cable company, concerning a possible transaction. Any such transaction would be subject to regulatory and other conditions," Virgin said in the statement.
Shares in Virgin, which is run by Richard Branson, were trading at $45.24 at 11:20 a.m. ET on Tuesday, up $6.55, or 16.9 percent. Liberty Global stock was trading at $67.37, down $2.09, or 3 percent.
- see the Virgin statement
Horizon launch drives Liberty Global to $2.5B in revenue for Q3 2012
Malone buys stake in Caribbean cable MSO Columbus International
Liberty Global closes OneLink cable system acquisition in Puerto Rico
John Malone cuts ribbon at The Cable Center theater
Liberty Global deploys Horizon TV platform with Samsung, Intel, NDS technology
Virgin Media picks up 206,000 TiVo subscribers in Q3 2012