Liberty Global offers $5.3 bn for Cable & Wireless

John Malone, chairman, Liberty GlobalLiberty Global, backed by US cable baron John Malone, has tabled a £3.5-billion ($5.3-billion) offer to buy British telecom group Cable & Wireless Communications Plc (CWC), in a bid to expand Liberty's broadband and wireless operations in Latin America and the Caribbean.

News about the negotiations between Liberty Global, the world's largest international cable company, and CWC surfaced about a month ago, and in accordance with the UK takeover regulations, Liberty Global was to submit its firm proposal before the set deadline of 19 November. (See: Liberty Global in talks to buy Cable & Wireless for over $5.5 bn)

London-based Liberty Global has cable operations in 14 countries, including 12 in Europe, serving 27 million customers receiving 57 million distinct services, and also five million mobile subscribers.

Apart from its European operations, Liberty Global's LiLAC Group has growing presence in Latin America and the Caribbean. The company's annual revenue is over $18 billion.

Liberty Global has been expanding through acquisitions in the past few years to expand its business.

Recently, the company acquired British cable operator Virgin Media, Dutch Telecom provider Ziggo and Belgium's Telenet Group.

CWC, also London-based with its operational hub located in Miami, is a leading provider of full service communications with presence in 17 countries in the Caribbean, Latin America and the Seychelles. The company's annual sales are over $2.4 billion.

Under the terms, CWC shareholders will receive $81.04 pence per share including a special dividend of 3 pence per share.

The offer price represents a 40-per cent premium over CWC stock price on 21 October, the day before the takeover talks were disclosed.

Liberty Global will assume CWC's net debt of $2.7 billion as part of the deal.

Liberty Global CEO Mike Fries said, ''The acquisition of Cable & Wireless represents a watershed moment for our recently created LiLAC platform. It will add significant scale and management depth to our fast-growing operations in Latin America and the Caribbean, while creating a new regional consumer and business-to-business powerhouse.''

Upon completion, the combined LiLAC and CWC businesses will benefit from the broader group's scale and management expertise and will serve 10 million video, data, voice and mobile subscribers, with leading positions across multiple markets, Fries said.

The companies expect additional synergies above the already announced $125 million related to CWC's acquisition of Bahamas-headquartered Columbus International earlier this year.

They also expect to generate low double-digit operating cash flow as a result of the merger.

Malone already owns a 13-per cent stake in CWC, besides holding a 22-per cent interest in Columbus.

The transaction is expected to close in the second quarter of 2016 subject to shareholder approvals, regulatory clearances and other closing conditions.

Upon closing CWC will become part of Liberty Global's LiLAC Group. Liberty Global Group will own about 67.4 per cent of the LiLAC Group, while existing LiLAC Group shareholders will hold 25.4 per cent by and CWC shareholders7.2 per cent.

The combined operations will create a unique investment vehicle, which includes an attractive combination of organic growth and further consolidation opportunities throughout Latin America and the Caribbean, Liberty Global said.

Goldman Sachs International and LionTree Advisors acted as financial advisors to Liberty Global in the transaction while CWC is advised by Evercore Partners International LLP and JP Morgan Cazenove.