John Malone's Liberty Global to Buy Dutch Cable Firm Ziggo

John Malone Sun Valley 2011 - H 2013
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John Malone Sun Valley 2011 - H 2013

UPDATED: The European cable giant will take full control of the largest cable group in the Netherlands in a deal valuing Ziggo at nearly $14 billion.

John Malone's Liberty Global on Monday unveiled a deal to take full control of leading Dutch cable group Ziggo in a stock and cash transaction valuing the latter at approximately $13.7 billion (€10 billion).

Liberty has been maneuvering to take control of Ziggo since early last year, when Malone's cable giant paid $810 million for just over 12 percent of the company. It later raised its stake to 28.5 percent.

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Ziggo serves 2.8 million customers in the Netherlands, making it the country's biggest cable TV supplier. Liberty Global already controls competing Dutch cable operator UPC Netherlands, which has more than 1.7 million customers. Competition authorities have to approve the Ziggo takeover.

“This transaction creates a nationwide cable champion that will drive investment and innovation for the benefit of Dutch consumers and businesses alike,” said Liberty Global CEO Mike Fries. “Our combined operations will reach over 90 percent 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.”

The Liberty Global deal will see Malone's cable giant pay $48.61 (€34.53) per Ziggo ordinary share in a combination of cash and Liberty Class A ordinary shares and Class C ordinary shares. The payout breaks down into $15 (€11) in cash, 0.2282 Liberty Global Class A ordinary shares and 0.5630 Liberty Global Class C ordinary shares for each Ziggo share.

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Based on the 10-day volume-weighted average price for Ziggo's stock, Liberty's offer represents a 38 percent premium on the prize Liberty paid for its initial stake in the Dutch group in March last year and a 22 percent premium on Ziggo's closing price on Oct. 15, the day before Ziggo announced Liberty had made a preliminary proposal for a buyout.

Fries said Liberty Global was targeting $219 million (€160 million) in annual synergies by 2018 as a result of the UPC Netherlands/Ziggo merger. Andrew Sukawaty, chairman of the supervisory board of Ziggo, said the deal would essentially combine two strong regional operators. “By joining forces (Ziggo and UPC Netherlands) will stimulate and maintain the leading position of the Netherlands in the digital economy,” he said.

Liberty's takeover offer has been unanimously recommended by Ziggo’s supervisory and management boards. The deal is expected to close in the second half of 2014.