Strategic combination will create the leading consumer and
B2B communications provider in Latin America and the
Caribbean
- Share offer and dividend imply blended
price of 81.04 pence per CWC share
- Creates premier broadband and wireless
platform with 10 million subscribers
- Purchase price multiple of 10.7x
including only reported synergies
- Additional synergies expected beyond
$125 million previously reported
- Combined business should generate low
double-digit rebased OCF growth
- Leading regional platform will
capitalize on further M&A opportunities
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN
WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION.
THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT
AND NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND
INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO
THE LIBERTY GLOBAL GROUP CLASS A ORDINARY SHARES, THE LIBERTY
GLOBAL GROUP CLASS C ORDINARY SHARES, THE LILAC GROUP CLASS A
ORDINARY SHARES OR THE LILAC GROUP CLASS C ORDINARY SHARES, EXCEPT
ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT, THE
PROSPECTUS AND THE PROXY STATEMENT WHICH ARE PROPOSED TO BE
PUBLISHED IN DUE COURSE
Liberty Global plc (“Liberty Global”) (NASDAQ: LBTYA, LBTYB,
LBTYK, LILA and LILAK) and Cable & Wireless Communications Plc
(“CWC”) (LSE: CWC) today announced a recommended offer (the
“Offer”) by Liberty Global for all outstanding and to be issued
shares of CWC. Pursuant to the Offer, Liberty Global would acquire
CWC for shares of Liberty Global in a scheme of arrangement valuing
CWC at a total equity value of approximately £3.5 billion ($5.3
billion)1, or an implied price of 78.04 pence per CWC share, based
on closing share prices as of November 13, 2015. Further, CWC
shareholders would be entitled to receive a special dividend in the
amount of 3.00 pence per share at the closing of the transaction,
which would be in lieu of any previously announced CWC
dividend.
The consideration of 81.04 pence per CWC share represents a
purchase price multiple of 10.7x CWC’s adjusted LTM September 30,
2015 EBITDA (on a proportionate basis), after taking into
consideration the unrealized2 cost synergies resulting from CWC’s
acquisition of Columbus International (“Columbus”). We believe that
there are incremental financial benefits over and above the $125
million of total run-rate cost synergies that have been publicly
quantified by CWC with respect to the Columbus acquisition, and we
expect to derive additional synergies as a result of the
combination of our LiLAC operations with CWC. We cannot provide an
estimate of the total incremental synergies at this time because a
quantified financial benefits statement is required under the U.K.
Takeover Code, which has not been prepared at this time. On a
pro-forma basis, we expect the combined group of CWC and LiLAC to
deliver low double-digit rebased OCF growth over the medium
term.
Under the terms of the Offer, Liberty Global will issue a
maximum of approximately 31.7 million LBTYA, 77.5 million LBTYK,
3.6 million LILA and 8.9 million LILAK ordinary shares3. In
addition, Liberty Global will assume CWC’s existing proportionate
net debt as part of the transaction, which was $2.7 billion as of
September 30, 2015. We expect that the dividend and estimated fees
and expenses will be funded from CWC liquidity including
incremental debt borrowings and LiLAC Group liquidity.
Mike Fries, CEO of Liberty Global, said, “The acquisition of
Cable & Wireless represents a watershed moment for
our recently created LiLAC platform. It will add significant
scale and management depth to our fast-growing
operations in Latin America and the Caribbean, while creating
a new regional consumer and B2B powerhouse. Upon
completion, the combined business will serve 10 million video,
data, voice and mobile subscribers, with leading positions
across multiple markets.”
“With our long track record of strong operational and financial
performance in the region, we are confident that this
combination will yield substantial synergies and
accelerate our current prospects for the LiLAC Group to low
double-digit rebased OCF growth over the medium term.
Our high-quality networks and commitment to product
innovation will provide the foundation for growth and value
creation for both Liberty Global and LiLAC shareholders. Upon
closing, the combined LiLAC and CWC businesses will benefit from
the broader group's scale and management expertise.”
Completion of the acquisition is subject to, among other
conditions, Liberty Global and CWC shareholder approvals, certain
regulatory approvals and court sanction of the scheme of
arrangement. Following the completion of the acquisition, it is
expected that CWC will be attributed to the LiLAC Group, with the
Liberty Global Group holding an inter-group interest in the LiLAC
Group, based on the 5 day volume-weighted average price (VWAP) of
Liberty Global shares leading up to the date of this announcement,
and a 95 trading day VWAP for LiLAC shares, which covers the period
from launch of the LiLAC tracking stock up to this announcement.
Based on the Offer set forth above, the LiLAC Group, on a pro forma
basis3, will be approximately 25.44% owned by existing LiLAC Group
shareholders and 7.21% owned by existing CWC shareholders, with
67.35% represented by the inter-group interest in favor of the
Liberty Global Group. No decision has been made as to whether the
LiLAC businesses would be spun-off; however, outstanding
inter-group interests are generally distributed to shareholders in
spin transactions.
The offer represents an 11% premium to the 5-day CWC VWAP of
73.11p as of November 13, 2015 close and a premium of 40% to the
closing share price of CWC of 58.00p on October 21, 2015, the day
before CWC announced that they were in talks to be acquired by
Liberty Global.
The Offer includes three alternative proposals which CWC
shareholders can elect to receive, as described in detail in the
Rule 2.7 announcement: a recommended proposal and two alternative
proposals. CWC shareholders are encouraged to review that document
for details. A brief summary of the proposals follows: The CWC
shareholders electing to receive the recommended proposal will
receive as consideration an amount of Liberty Global shares, with a
right to “mix and match” LiLAC shares, subject to pro-ration. The
recommended proposal would have an estimated value of 86.00p per
share based on the closing share price of Liberty Global shares
(blended) as of November 13, 2015 (assuming no LiLAC shares are
elected). Shareholders electing to receive either of the two other
proposals (the “Alternative Proposals”) will receive combinations
of Liberty Global and LiLAC shares in different proportions. The
former majority Columbus shareholders (“Columbus Holders”) have
agreed to elect for the Alternative Proposals, which are valued at
78.14p and 68.22p, respectively, based on the closing share prices
of Liberty Global and LiLAC shares (blended) as of November 13,
2015. The blended weighted average of these three alternative
offers is an implied price of 81.04 pence per CWC share. In no
event does the amount of consideration paid by Liberty Global
increase as a result of CWC shareholders making any of these
elections, as the number of Liberty Global and LiLAC shares are
fixed. Please see the Rule 2.7 announcement for further
details.
Strategic combination of LiLAC and CWC
Creating the leading consumer and B2B communications provider in
Latin America and the Caribbean
Together with the meaningful synergy opportunity, the combined
operations will create a unique investment vehicle, which includes
an attractive combination of organic growth and further
consolidation opportunities throughout Latin America and the
Caribbean.
We expect the proposed transaction will enhance the long-term
equity value for both Liberty Global Group and LiLAC Group
shareholders for the following reasons:
- Combines high-growth assets in the
Latin America and the Caribbean region to form the leading consumer
and B2B communications provider, with 10 million video,
broadband, fixed and mobile telephony subscription services4. This
new combination would have generated estimated consolidated
revenue5 of over $3.5 billion and estimated consolidated OCF5 of
$1.4 billion for the twelve months ended September 30, 2015. The
combined business is expected to deliver low double-digit rebased
OCF growth over the medium term.
- Adds a powerful B2B Latin American
and Caribbean platform to LiLAC, as CWC’s comprehensive product
portfolio and extensive terrestrial and submarine network will
position LiLAC to capitalize on the growth in the business market
throughout the region.
- Enables continued network investment
and product innovation for the benefit of consumers and business
customers alike, taking advantage of efficiencies driven from
combined scale, and leveraging both companies’ complementary
experience in product development and customer-centricity.
- Offers attractive organic growth
opportunities in broadband, pay TV and mobile data; Liberty
Global expects to capitalize on the market-leading brands, superior
fixed and mobile networks and product leadership of the new
combination to take advantage of underlying untapped demand for
broadband, pay TV and mobile products and drive customer
take-up.
- Provides significant synergy
opportunities; together with the extensive integration that is
currently ongoing by CWC with respect to its recent acquisition of
Columbus and supported by Liberty Global’s proven integration
experience, we believe there are incremental financial benefits
over and above those publicly quantified ($125 million of cost
synergies) by CWC, as well as additional synergy opportunities from
combining CWC with LiLAC.
- Creates leading regional platform to
capitalize on further M&A opportunities; Liberty Global
believes that the combined businesses of LiLAC and CWC will be
well-positioned to exploit the fragmented telecom and pay
television landscape.
Transaction Details
For the transaction details, please see the Rule 2.7
announcement in its entirety, which can be found on our website at
www.libertyglobal.com.
In connection with the transaction, Goldman Sachs International
and LionTree Advisors acted as financial advisors to Liberty
Global. Shearman & Sterling LLP served as legal counsel to
Liberty Global.
Next Steps and Indicative Timetable
The issuance of shares to CWC shareholders requires approval by
the Liberty Global shareholders under applicable NASDAQ listing
rules and U.K. corporate law.
Liberty Global will prepare and send to Liberty Global
shareholders a proxy statement summarizing the background to and
reasons for the transaction, which will include a notice convening
a meeting of Liberty Global shareholders to approve the
transaction. The transaction is conditional on, among other things,
the approval of the shares issued in the transaction by the
requisite majority of Liberty Global shareholders.
It is expected that a proxy statement will be filed with the SEC
and sent to Liberty Global shareholders during the first quarter of
2016. It is anticipated that both the Liberty Global and the CWC
shareholder meetings will be held within approximately five months
of the date of this announcement.
Based on the required steps and subject to the necessary
conditions and approvals, Liberty Global anticipates that the Offer
will close in the second quarter of 2016.
Synergy Opportunity
In addition to the extensive integration that is ongoing between
CWC and Columbus, which is expected to generate $125 million of
run-rate cost savings and $145 million of one-time capital
expenditure synergies by March 31, 2018, CWC has also disclosed
that they expect material revenue synergies through cross-selling,
improvements in the video offering and network quality, and
enhancements in the B2B offering.
Furthermore, Liberty Global expects to generate synergies as a
result of the integration of CWC and the LiLAC Group businesses.
Areas of opportunity include savings related to elimination of
public company expenses, further corporate and administrative
rationalization of existing LiLAC Group operations with those of
CWC, leveraging the combined scale in areas such as content,
procurement, and product development, and capitalizing on CWC’s
terrestrial and submarine network assets and B2B expertise and
product portfolio to benefit LiLAC Group’s operations.
In order to provide an estimate of synergies over and above the
$125 million mentioned above, a quantified financial benefits
statement is required under the U.K. Takeover Code. Such statement
regarding the additional potential synergies has not been prepared
and therefore an incremental synergy figure cannot be provided at
this time.
If the transaction closes, utilization of CWC’s US and U.K.
deferred tax assets would be restricted and we believe that
material realization of the benefits of those assets would be
unlikely.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding the transaction and the
anticipated consequences and benefits of the transaction, the
targeted closing date of the transaction, the intended financing,
our expectations with respect to future growth prospects and the
impact of the transaction on our operations and financial
performance, and other information and statements that are not
historical fact. These forward-looking statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by these statements.
These risks and uncertainties include the receipt and timing of
necessary regulatory and shareholder approvals, the ability to
finance the transaction (including the completion of the debt
financing), CWC’s ability to continue financial and operational
growth at historic levels, the ability to successfully operate and
integrate CWC’s operations, continued use by subscribers and
potential subscribers of CWC’s services, the ability to achieve
expected operational efficiencies, synergies and economies of
scale, as well as other factors detailed from time to time in
Liberty Global’s filings with the Securities and Exchange
Commission (“SEC”) including Liberty Global’s most recently filed
Form 10-K and Form 10-Qs. These forward-looking statements speak
only as of the date of this release. We expressly disclaim any
obligation or undertaking to disseminate any updates or revisions
to any forward looking statement contained herein to reflect any
change in the expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
Additional Information and Where to Find it
This press release may be deemed to be solicitation material in
respect of the proposed acquisition of Cable & Wireless
Communications Plc (“CWC”) by Liberty Global plc (“Liberty
Global”), including the issuance of shares of Liberty Global
ordinary shares in respect of the proposed acquisition. In
connection with the foregoing proposed issuance of Liberty Global
ordinary shares, Liberty Global expects to file a proxy statement
on Schedule 14A with the Securities and Exchange Commission (the
“SEC”). To the extent Liberty Global effects the acquisition of CWC
as a Scheme under United Kingdom law, the issuance of Liberty
Global ordinary shares in the acquisition would not be expected to
require registration under the Securities Act of 1933, as amended
(the “Act”), pursuant to an exemption provided by
Section 3(a)(10) under the Act. In the event that Liberty
Global determines to conduct the acquisition pursuant to an offer
or otherwise in a manner that is not exempt from the registration
requirements of the Act, it will file a registration statement with
the SEC containing a prospectus with respect to the Liberty Global
ordinary shares that would be issued in the acquisition. INVESTORS
AND SECURITY HOLDERS OF LIBERTY GLOBAL ARE URGED TO READ THESE
MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY
OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE ACQUISITION THAT
LIBERTY GLOBAL WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LIBERTY
GLOBAL, THE PROPOSED ISSUANCE OF LIBERTY GLOBAL ORDINARY SHARES,
AND THE PROPOSED ACQUISITION. The preliminary proxy statement, the
definitive proxy statement, the registration statement/prospectus,
in each case as applicable, and other relevant materials in
connection with the proposed issuance of Liberty Global ordinary
shares and the acquisition (when they become available), and any
other documents filed by Liberty Global with the SEC, may be
obtained free of charge at the SEC’s website at www.sec.gov. In
addition, investors and security holders may obtain free copies of
the documents filed with the SEC by sending a request to: Liberty
Global, 12300 Liberty Boulevard, Englewood, CO 80112, USA,
Attention: Investor Relations.
Participants in a Solicitation
The directors and executive officers of Liberty Global and other
persons may be deemed to be participants in the solicitation of
proxies in respect of proposals relating to the approval of the
transaction. Information regarding the directors and executive
officers of Liberty Global and other participants in the proxy
solicitations and a description of their respective direct and
indirect interests, by security holdings or otherwise, is contained
in Liberty Global’s proxy statement filed with the SEC on April 29,
2015.
No Profit Forecast
Nothing contained herein shall be deemed to be a forecast,
projection or estimate of future financial performance of Liberty
Global or CWC or the combined business following completion of the
transaction, unless otherwise stated.
Disclosure Requirements of the UK Takeover Code
CWC is a company subject to the jurisdiction of the UK Takeover
Code (the “Code”).
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person’s interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person’s interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
Disclosures are therefore required in the shares of Liberty
Global and CWC.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3. Opening Position Disclosures
must also be made by the offeree company and by any offeror and
Dealing Disclosures must also be made by the offeree company, by
any offeror and by any persons acting in concert with any of them
(see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel’s website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel’s Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure
About Liberty Global
Liberty Global is the largest international cable company with
operations in 14 countries. We connect people to the digital world
and enable them to discover and experience its endless
possibilities. Our market-leading products are provided through
next-generation networks and innovative technology platforms that
connected 27 million customers subscribing to 57 million
television, broadband internet and telephony services at September
30, 2015. In addition, we served five million mobile subscribers
and offered WiFi service across six million access points.
Liberty Global’s businesses are currently attributed to two
tracking stock groups: the Liberty Global Group (NASDAQ: LBTYA,
LBTYB and LBTYK), which primarily comprises our European
operations, and the LiLAC Group (NASDAQ: LILA and LILAK, OTC Link:
LILAB), which comprises our operations in Latin America and the
Caribbean.
Liberty Global's consumer brands are Virgin Media, Ziggo,
Unitymedia, Telenet, UPC, VTR and Liberty. Our operations also
include Liberty Global Business Services and Liberty Global
Ventures. For more information, please visit www.libertyglobal.com
or contact:
_________________________________
1 All translations throughout this press release are based
on a GBP/USD exchange rate of 1.5206 as of November 13, 2015. 2
Approximately $98 million of the $106 million proportionate cost
synergies resulting from CWC’s acquisition of Columbus had not been
realized as of September 30, 2015. 3 Based on a fully-diluted CWC
share count of 4.4 billion shares as of September 30, 2015. 4
Statistics for Liberty Global and CWC are based on each company’s
own, separate accounting policies. Statistics are subject to change
after completion of the transaction once CWC statistics are
presented in accordance with Liberty Global policies. 5
The new combination of the LiLAC Group and
CWC would have generated estimated consolidated revenue of over
$3.5 billion and estimated consolidated OCF of $1.4 billion for the
twelve months ended September 30, 2015. These figures are based on
the summation of (i) the LiLAC Group’s consolidated revenue and
OCF, as derived from Liberty Global’s annual and quarterly reports,
as filed with the U.S. Securities and Exchange Commission, and (ii)
the consolidated CWC revenue and EBITDA pro forma for Columbus
revenue and EBITDA for the twelve months ended 30 September 2015,
as detailed in notes 10 and 11, respectively, of Appendix II of the
Rule 2.7 announcement made by Liberty Global on 16 November 2015.
LiLAC Group figures are reported under generally accepted
accounting principles in the U.S. (“U.S. GAAP”) and CWC figures are
reported under International Financial Reporting Standards as
adopted by the European Union (“IFRS”). Liberty Global has not
completed its analysis of the differences between U.S. GAAP and
IFRS with respect to CWC’s consolidated financial statements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151116006312/en/
Liberty GlobalInvestor
Relations:Oskar Nooij, +1 303 220 4218Christian
Fangmann, +49 221 84 62 5151John Rea, +1 303 220
4238orCorporate
Communications:Marcus Smith, +44 20 7190 6374Bert
Holtkamp, +31 20 778 9800Matt Beake, +44 20 8483 6428
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