John Malone's Liberty Global Increases Stake in Belgian Cable Firm Telenet

LONDON - John Malone's Liberty Global has raised its stake in Belgian cable operator Telenet Group to 58.4 percent as the company continues to consolidate cable operators across Europe.

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Liberty Global already owned 50.2 percent and has been the controlling shareholder since 2007. But it recently bid $45.30 (35 euros) per share, or about $2.5 billion, for all Telenet shares it didn't already own.

The U.S. company wanted to take full ownership to reap synergies from managing Telenet in more coordinated fashion with its other European holdings.

LG offered a 14 percent premium to the company's stock price at the time, but then Telenet raised its guidance.
Some big Telenet shareholders then argued that LG should offer a higher premium. Just last week, two of Telenet's five biggest outside investors said they wouldn't accept the offer.

LG said Tuesday that about 9.5 million Telenet shares and 3,000 warrants were tendered in its voluntary cash tender offer, boosting its stake beyond 58 percent. It wasn't immediately clear if LG would try to take another run at acquiring all of Telenet at a later stage.

"We remain committed to investing in growth opportunities for Telenet, maintaining its position as a leading innovator in the Belgian market and delivering best-in-class services to its customers," said Liberty Global president and CEO Mike Fries said. "We believe that this is the right time for Telenet to be more closely integrated within our pan-European platform and in an environment where scale is paramount, we believe that closer integration will benefit all Telenet stakeholders."

Barclays Capital analyst James Ratcliffe said: "The limited response [from Telenet investors] comes as no surprise, given strong Telenet guidance and prior announcements from several significant holders that they did not plan to tender...We view the tender as approximately 1 percent accretive" to LGI's estimated 2013 free cash flow.

Ratcliffe reiterated his "overweight" rating on LG, calling it his top stock pick in the cable and satellite TV space.

LG has about 20 million subscribers across 13 countries.

It previously completed a $4.1 billion acquisition of Kabel BW, Germany's third-largest cable firm. LG's German cable operations now serve more than 10 million subscribers.

The company has also been eyeing cable operators in such countries as Norway and Poland.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai