Virgin Media (VMED) to be Acquired by Liberty Global

Shares of Virgin Media Inc. (VMED: Charts, News) closed up +6.92 or +17.89 percent to $45.61 per share on Tuesday after news that John Malone's Liberty Global Inc. (LBTYA: Charts, News) would be buying the company in a deal worth $16 billion in cash and stock.

The deal will pit Malone against old rival Rupert Murdoch whose News Corp. owns 40 percent of the UK's largest pay TV provider, British Sky Broadcasting Group. The acquisition is the largest purchase of a media company since the $17 billion merger which created Thomson Reuters in 2007. Combining Liberty Global and Virgin Media will create a broadband company that would cover 47 million households and over 25 million customers in 14 countries. Daily Chart Virgin Media Inc. was created as a result of the merger of NTL Telewest and Virgin Mobile UK in 2006 with the company offering internet, television and mobile and fixed line phone services. Virgin Media is the second largest provider of pay TV services in the UK. The deal for Virgin Media values the company at $47.87 per share. Liberty Global will offer Virgin Media shareholders $17.50 in cash, 0.2582 shares of Liberty Global Series A stock and 0.1928 shares of its Series C shares. The basis for Liberty Global's A Series is for a share price of $69.46, while the C Series shares will have a basis of $64.50 per share. The price of $47.87 per share reflects a premium of 24 percent from Virgin Media's closing stock price on February 4th. The deal will be based on 335 million fully diluted shares of Liberty Global. Liberty Global will issue around 86 million Class A Series shares and 65 million Class C Series shares. In both cases the shares will be of the plc and will have similar rights as existing Series A and C common shares. Once completed, Virgin Media shareholders will own approximately 36 percent of Liberty Global's pro forma shares outstanding and have around 26 percent of voting rights. After the announcement, Liberty Global President and CEO, Mike Fries stated that, "Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we've been successfully using for over seven years. Virgin Media will add significant scale and a first-class management team in Europe's largest and most dynamic media and communications market. After the deal, roughly 80% of Liberty Global's revenue will come from just five attractive and strong countries - the UK, Germany, Belgium, Switzerland and the Netherlands." Neil Berkett, Virgin Media's CEO expressed his enthusiasm, stating, "Over the past six years, Virgin Media has transformed the digital experience of millions of customers, catalyzed a deep-rooted change in the UK's digital landscape and delivered impressive growth and returns for our shareholders. I'm confident that this deal will help us to build on this legacy. Virgin Media and Liberty Global have a shared ambition focus on operational excellence and commitment to driving shareholder value. The combined company will be able to grow faster and deliver enhanced returns by capitalizing on the exciting opportunities that the digital Revolution presents, both in the UK and across Europe." After Tuesday's close, Virgin Media stock may have more room on the upside and could benefit from third party interest. Virgin Media Inc. is definitely a stock to watch in February. Other News About VMED Virgin Media Promotes Jeff Dodds to Chief Marketing Officer Dodds replaces Nigel Gilbert as Chief Marketing Officer. Tennant, Bolt and Branson Back for Virgin Media Ads Virgin Media launches multi-million pound ad campaign. Other Stocks in the News Dell Taken Private as PC Slump Hastens $24 Billion Buyout Largest LBO in recent memory will have Silver Lake pay $13.65 per share for Dell. Disney Beats Estimates, Sees Stronger Quarters Ahead Company beats the street and improves guidance for 2013. Copyright 2013 by, Inc. 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Published on Feb 6, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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