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Liberty Global buys Virgin Media for $23.3bn

Liberty Global becomes a dominant player.

The US cable group Liberty Global has signed an agreement to acquire the UK pay-TV operator Virgin Media for an enterprise value of $23.3bn.

For Liberty Global, which already has cable assets in Germany, Belgium and other European countries, the deal will provide a successful entry into the UK market to provide its services to 25 million customers.

Mike Fries, CEO of Liberty Global, said: “Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market.”

With this deal, BSkyB and smaller players like BT and TalkTalk may see increased competition in the UK market. In addition, the acquisition will create direct competition between John Malone, the owner of Liberty Global, and Rupert Murdoch, whose News Corp. controls BskyB.

“The UK market has exhibited a much more rational competitive posture in the last 18 or 24 months than it did at any time prior to that,” Fries added.

Fries said that Robust debt markets didn’t hurt in sealing a deal which will add $4bn of new borrowings to Virgin Media’s debt and added that Liberty Global saw the opportunity to save $180m from the two companies’ combined $12bn annual operational and capital expenditure budget.

“I do not see us doing anything in this market that’s meaningfully different from what Virgin’s been doing with respect to premium content,” Fries continued.

Liberty Global was more likely to accelerate investment in faster broadband networks, he indicated, saying it would “continue the trend” Virgin Media had been on.

Liberty Global will move its domicile from Delaware to the UK and retain its US headquarters and Nasdaq listing.

Meanwhile, Virgin Media shares rose 18 per cent higher on Tuesday, while shares of Liberty Global declined 2.3 per cent.

Liberty Global was advised by LionTree Advisors and Credit Suisse, while Virgin Media was advised by Goldman Sachs and JPMorgan.