Liberty Global announced that it has reached an agreement with the Dutch broadband provider Ziggo to fully take it over. The deal is estimated to 4.9 billion Euro (6.7 billion dollars) and will consolidate the positions of Liberty Global as the leader in the cable industry in Europe.
The two companies announced the investors of Ziggo NV are going to receive 34.53 Euro a share, according to the agreement,. This includes 11 Euro in cash per share and the remainder in Liberty Global stock. A person familiar with the matter, who asked not to be identified, because the negotiations are private, revealed that Ziggo NV is seeking 3.7 billion Euro of loans to finance its buyout.
The fact that Ziggo has more than 2.7 million customers allows Liberty Global to combine the business with its UPC cable unit in order to take on Dutch carrier Royal KPN.
One of the analysts working for ING Groep – Emmanuel Carlier commented on the information: “Its a fair offer. That the shares are falling is due to the offer being for a large part in stock some people cant or dont want to have U.S. Stocks.”
Liberty Global has been trying to extend its reach in Europe. That is one of the main reasons why it acquired Virgin Media Inc. in 2013. The deal was estimated to about 16 billion dollars. The company is also known to operate in Germany, Switzerland, Austria, Belgium, Ireland, as well as in Eastern Europe. The company is also making a research about a spin-off of its business located in Latin America. Such a move would make Liberty Global an European cable company.
On December the 21st 2013, Ziggo announced that it is negotiating with Liberty Global. Earlier last year it rejected a takeover bid made by Liberty Global.
Mike Fries, who is the Chief Executive Officer of Liberty Global, made a statement, cited by Bloomberg: “Our combined operations will reach over 90% of all Dutch households allowing us to compete more effectively with the other national telecommunications and satellite platforms in the Netherlands, and at the same time generate significant revenue and operating efficiencies.”
According to Bloomberg, the current share price of Liberty Global Plc is 2.64% down, and its one-year return rate is 21.69% up. According to Bloomberg, the current share price of Ziggo NV is 3.82% down, and its one-year return rate is 50.45% up.
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