Liberty Global clinches deal to buy Digicel rival Cable & Wireless Communications
Denis O’Brien’s Digicel telecoms firm identified Cable & Wireless as its key competitor in its Caribbean markets.
It now likely faces increased competition as Liberty, which also owns UPC-Virgin Media and TV3 here, and has a 9.9% stake in ITV in Britain, completes the purchase of Cable & Wireless.
In early October, Mr O’Brien unexpectedly cancelled plans to raise $2bn in an IPO.
Cable & Wireless shareholders will receive a 3p-a- share one-time dividend at the deal’s completion and the transaction values Cable & Wireless at 78.04p per share.
The purchase gives Mr Malone a critical mass in Latin America, where he created a tracking stock in July called LiLAC for Liberty Global’s assets in Chile and Puerto Rico.
#Deadline John Malone’s Liberty Global Acquires Cable & Wireless For .3 Billion: John Malone's Liberty Globa... https://t.co/o5WRpxb1Aq
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Mr Malone, who spent over $50bn in the past decade amassing cable companies across Europe, is looking to do the same in parts of Latin America, and may even spin off that unit in the future.
The acquisition is a “watershed moment” for LiLAC, as it “will add significant scale and management depth to our fast-growing operations in Latin America and the Caribbean”, according to Liberty Global chief executive Mike Fries.
Cable & Wireless received more than half of its $1.75bn in revenue last year from Panama and the Caribbean.
Cable & Wireless said Liberty Global was an “outstanding custodian of our business”, adding that the enlarged company will expand consumer and business-to-business services even faster.
As part of the deal, Liberty Global will take on Cable & Wireless’s net debt of $2.7bn.
The deal represents a multiple of 10.7 times Cable & Wireless’s adjusted EBITDA, after taking into consideration cost synergies.
Liberty’s businesses are attributed to two tracking stock groups: Liberty Global Group, which comprises the company’s European operations; and the LiLAC Group, which comprises Latin American and Caribbean operations.
The acquisition of Cable & Wireless was why Liberty created the LiLAC tracking stock, said Neil Campling, an analyst with Aviate Global in London.
“We have seen Malone build out infrastructure first in Europe to create a distribution platform and now he’s adding content deals. He has both in the US already.”
Mr Malone, 74, has taken on mountains of debt to expand European operations as a plunge in interest rates allowed Liberty Global to borrow cheaply.
Analysts predict he will turn his focus to content assets in Europe, such as ITV.
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