Liberty Global cable group is owned by US billionaire John Malone. The company already owns cable TV and broadband suppliers in Europe, including in Belgium and Germany. Now with the acquisition of the UK’s Virgin Media it is set to become the world’s largest broadband company “with 25 million customers in 14 countries” reports the BBC. Following the merger, Liberty Global’s HQ will relocate from Delaware, USA to London.
The deal, worth £15 billion ($23.3 billion), is subject to both shareholder approval and the scrutiny of the government’s competitive regulatory body. If everything gets the green light Virgin Media shareholders will benefit from the equivalent of a 24 per cent premium on the value of their shares. (Compared to share values on Monday 4th Feb, before the rumours bumped up the price.)
Mike Fries, chief executive of Liberty Global, said of the deal; “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’s current chief exec, Neil Berkett said “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.” However Berkett intends to stand down when the merger concludes.
Looking at the UK market, BSkyB has 10.7 million customers compared to Virgin Media’s 4.9 million customer base. Putting the spotlight upon Virgin’s fibre-optic network The Guardian notes that Liberty “will boost investment in the speed of Virgin's fibre-optic network, but is unlikely to seek a major expansion to its UK footprint”. Currently Virgin’s network covers 13 million homes of which 4.9 million are customers.
It is interesting to note that Liberty’s John Malone and Sky owner Rupert Murdoch have clashed before in a battle over the US satellite broadcaster DirecTV Group.
