Liberty Global in talks to buy Cable & Wireless for over $5.5 bn

Liberty Global, backed by US cable king John Malone, is in talks to buy British telecoms group Cable & Wireless Communications Plc (CWC) in a potential cash-and-stock deal worth more than $5.5 billion excluding debt.

Reacting to media reports, CWC said that it ''notes the recent press speculation and confirms that CWC is in discussions with Liberty Global plc regarding a possible shares and cash offer for CWC.''

''Shareholders are advised to take no action. There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made,'' CWC added.

Under the UK takeover rules, Liberty Global now has until 19 November to table a firm offer or walk away for six months.

The cash and stock deal would value CWC at more than £3.2 billion ($4.9 billion) as of Friday market close.

Negotiations are continuing around a price of $5.5 billion, excluding debt of $2.6 billion, a 40-per cent premium to CWC's Friday closing share price of £74.60, according to several media reports.

Liberty Global is already a major shareholder in CWC with a 13-per cent voting stake, which it acquired when CWC acquired Caribbean cable operation Columbus Communications in a $1.85-billion cash and stock deal. (See: Cable & Wireless Communications to buy Columbus International for $1.85 bn)

Liberty Global has recently been expanding through acquisitions, and a potential deal would help it to expand its presence in Latin America and the Caribbean.

Liberty Global was formed through the 2005 merger of Liberty Media and UnitedGlobalCom and operates very high-speed broadband cable networks in nearly a dozen European countries.

The UK-based company operates in 10 countries in Europe, and is the largest cable operator in Poland, Switzerland, Belgium, Austria, Slovakia, Hungary and Czech Republic.

Liberty Global, which has splurged around $40 billion in the past seven years in acquiring European assets, has a market cap of $32.7 billion, debt of $41.1 billion and revenues of $18.2 billion.

In 2013 it paid $15.75 billion to acquire Virgin Media Inc, the UK's second largest pay-TV operator that also provides fixed and mobile telephone, and broadband internet services (See: Liberty Global strikes Virgin Media deal for $15.75 bn)

As part of its acquisition, Liberty Global relocated from the US to the UK by becoming a subsidiary of a new British holding company.

Liberty Global's consumer brands include UPC, Unitymedia, Kabel BW, Telenet and VTR. It also has a 50-per cent stake in MGM Networks in the US through Europe-based Chellomedia.

Recently it acquired British cable operator Virgin Media, Dutch telecom provider Ziggo and fully acquired Belgian peer Telenet Group Holding NV.

It is the largest international cable operator with 27 million customers across 14 countries and eighty per cent of its revenue comes from Europe, of which, two-thirds comes from four countries, Belgium, the Netherlands, Switzerland and Germany.

CWC operates in 17 countries throughout the Caribbean, Latin America and the Seychelles. It is a market leader in 10 out of 15 mobile markets, 14 out of 15 broadband markets, and all 14 fixed line markets.