Liberty Global has agreed a cash and shares deal worth $23.3bn for Virgin Media.
Mobile and b2b were highlighted by the international cable company as particular areas of growth for Virgin Media. Liberty Global is paying a 24% premium on Virgin Media's share price to cement the deal. It said the merger will create 'the world's leading broadband communications company', with a presence 47 million homes and serving 25 million customers across 14 countries.
It seems likely Virgin Media, which will continue to trade under its own name, will stick with its quad-play policy of driving sales across mobile, television, broadband and home phone services. Liberty Global said there was 'significant potential' to deliver enhanced and premium services to its existing customer base.
US billionaire John Malone tried to buy Virgin Media several years ago and today's takeover will strengthen his business in its battle against rival Rupert Murdoch's News Corporation.
Mike Fries, president and CEO of Liberty Global, said: '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. After the deal, roughly 80% of Liberty Global's revenue will come from just five attractive and strong countries - the UK, Germany, Belgium, Switzerland and the Netherlands.
'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. But just as importantly, Virgin Media's market leading innovation and product expertise, particularly in mobile and B2B, will accelerate our own development of these business segments.'
Virgin Media CEO Neil Berkett said: '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 capitalizing on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.'
Author: Graeme Neill