Liberty Global Inc. (LBTYA) Acquires Virgin Media Inc. (VMED) for $23.3 Billion

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LONDON — After acknowledging press speculation earlier this week that it was in talks concerning “a possible transaction,” Virgin Media Inc. (NASDAQ:VMED) (LSE:VMED) this morning announced that Liberty Global Inc. (NASDAQ:LBTYA) is to acquire the company, creating the world’s leading broadband communications company.

In a stock and cash merger valued at approximately $23.3 billion, Virgin Media shareholders will receive $17.50 in cash, 0.2582 Liberty Global Series A shares, and 0.1928 Liberty Global Series C shares for each share they own — a price of around $47.87 per Virgin Media share. The cash component of the equity purchase price of around $5.9 billion will be funded largely through a combination of debt financing and available liquidity of both Liberty Global and Virgin Media. Excluding debt, the cash and stock part of the deal comes in at around $16 billion.

Liberty Global IncVirgin Media CEO Neil Berkett commented:

Over the past six years, Virgin Media has transformed the digital experience of millions of customers, catalyzed a deep-rooted change in the UK’s digital landscape and delivered impressive growth and returns for our shareholders. I’m confident that this deal will help us to build on this legacy. Virgin Media and Liberty Global have a shared ambition, focus on operational excellence and commitment to driving shareholder value. The combined company will be able to grow faster and deliver enhanced returns by capitalising on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.

The union will see Liberty Global incorporate Virgin’s customer base to cover a whopping 24 million customers in 14 countries, covering 47 million homes. The combined company will be focused on the strongest and most strategic markets in Europe — about 80% of Liberty Global’s revenue will come from the U.K., Germany, Belgium, Switzerland, and the Netherlands.

Mike Fries, president and CEO of Liberty Global, added:

Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we’ve been successfully using for over seven years. Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market.

Like all of our strategic acquisitions we expect this combination to yield meaningful operating and capex synergies of approximately $180 million per year upon full integration… Virgin Media will be complementary to our own organic revenue and OCF growth profile, while providing attractive free cash flow enhancement to our shareholders. As a result, we intend to increase our commitment to share buybacks going forward with an initial target of approximately $3.5 billion over a two-year period upon closing.

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