Liberty Global Buys Cable & Wireless as a Means to Consolidate in the Latin American Market

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• published: 17 Nov 2015
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John Malone-backed international cable group Liberty Global plc (LBTYA) announced Monday, Nov. 16, plans to acquire Latin American and Caribbean communications group Cable & Wireless Communications Plc for £3.5 billion ($5.3 billion), less than a month after the companies acknowledged talks. The transaction, which Liberty Global CEO Mike Fries called a 'watershed moment' in a press release, reads straight from the Malone playbook. Liberty Global has acquired cable operators throughout Europe, and the acquisition of Cable & Wireless would accelerate the consolidation strategy of the company's Latin American and Caribbean unit, Liberty LiLac Group. Moreover, Cable & Wireless shareholders have the option to receive a tracking stock, for which Malone has a penchant. The offer comes equates to about 78.04 pence per CWC share, based on recent trading. Cable & Wireless investors would get a 3 pence per share dividend when the deal closes, however, boosting their compensation to 81.04 pence per share. In addition to the equity payment, Liberty Global would also take on $2.7 billion in Cable & Wireless net debt. The buyer put the valuation at 10.7 times adjusted Ebitda for the twelve months ending September 30, 2015. LiLac generates about $1.2 billion in revenues from operations in Chile and Latin America, based on annualized results from the first half of 2015. Following the deal, the company says its top line would exceed $3.5 billion. The companies said they would have 10 million subscribers to their TV, broadband phone and mobile services. Subscribe to TheStreetTV on YouTube: http://t.st/TheStreetTV For more content from TheStreet visit: http://thestreet.com Check out all our videos: http://youtube.com/user/TheStreetTV Follow TheStreet on Twitter: http://twitter.com/thestreet Like TheStreet on Facebook: http://facebook.com/TheStreet Follow TheStreet on LinkedIn: http://linkedin.com/company/theStreet Follow TheStreet on Google+: http://plus.google.com/+TheStreet