Liberty Global Inc. (LBTYA) finally completes the acquisition of the British cable MSO, Virgin Media. On Feb 2013, Liberty Global decided to acquire a 100% stake in Virgin Media in a cash and equity deal. The deal is worth around $15.8 billion or an enterprise value of nearly $23.3 billion.
On Jun 7, the company declared that it has finally received shareholders’ approval, regulatory approvals including both the U.S. and European and completed other customary closing conditions to acquie Virgin Media.
The acquisition makes Liberty Global the largest cable TV MSO (multi service operator) in the world, surpassing Comcast Corp. (CMCSA), the largest cable MSO of the U.S. Together, Liberty Global and Virgin Media will have approximately 25 million subscribers compared with nearly 22 million subscribers of Comcast.
In the U.K., the merged entity will become a formidable challenger to British Sky Broadcasting Group plc., which is the largest pay-TV operator in the U.K. and is partially controlled by News Corp. (NWSA).
Liberty Global is gradually establishing a strong foothold in the European cable TV market. On Apr 2013, Liberty Global acquired a 12.65% ownership of Ziggo, the largest cable MSO in the Netherlands. Ziggo also competes with telecom operators such as, Royal KPN N.V. and Vodafone Group plc. (VOD). Liberty Global currently has a Zacks Rank #3 (Hold).
We believe that the long-term business fundamental of the company is very intriguing, primarily due to a strong demand for its digital cable-TV services, faster broadband and triple-play bundled offerings. Acquisition of Virgin Media will enable Liberty Global to explore U.K., which is one of the most lucrative markets in Europe.
In the coming years, we believe Liberty Global’s revenues will continue to benefit from a ‘triple play’ of video, broadband, and telephone, as it signs up more “bundled” customers in Europe. The triple-play customer base grew 13.8% year over year in the first quarter of 2013.
The company is also concentrating on its double-play product, Internet and telephony, which has the potential to expand. The double-play customer base penetration nudged by 5.9% year over year in the last reported quarter.
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