LBTYA Continues European Venture

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Liberty Global Inc. (LBTYA), a leading cable operator in Europe and Latin America is set to further consolidate its foothold in the core North European markets. Yesterday, the company announced that it has acquired 12.65% ownership of Ziggo N.V., the largest cable MSO (multi service operator) in Netherlands.

Liberty Global has acquired 25.3 million common outstanding shares of Ziggo from Barclays Capital Securities Ltd. for a total consideration of Euro 632.5 million (around $809.4 million).

Liberty Global already has a strong presence in the Dutch cable-TV market through its UPC Broadband Holding BV unit, which is the second largest cable MSO in that country. Liberty Global is trying to extensively penetrate the European region with its bundled video, voice and Internet (data) services. The European markets are still relatively untapped for this unique triple-play offering.

At the end of 2012, Ziggo had more than 2.2 million digital TV subscribers, almost 1.8 million Internet subscribers and 1.5 million telephone subscribers. Ziggo also competes with telecom operators such as, Royal KPN N.V. and Vodafone Group plc. (VOD). A major positive for Liberty Global is that Ziggo currently has a dividend yield of about 7.4%. Liberty Global expects Ziggo to pay Euro 370 (approximately $473.5 million) to investors as dividend.

From early 2010, Liberty Global is continuing its business restructuring. The company is concentrating primarily on Europe and Latin America and divested operations in other parts of the world.

On Feb 5, 2013, Liberty Global came out with a joint press statement with Virgin Media Inc. (VMED), that the two companies have entered into an agreement in which Liberty Global will acquire a 100% stake in Virgin Media in a cash and equity deal. The deal is expected to be of $15.8 billion or an enterprise value of nearly $23.3 billion. 

Both the companies are expecting the deal to be completed by the second quarter of 2013, subject to customary regulatory approval. If this deal gets approved, then combined entity will become a formidable challenger to BSkyB, the largest pay-TV operator of U.K. and BT Group plc. (BT). Liberty Global currently has a Zacks Rank #2 (Buy).

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