It looks like John Malone and Liberty Global are at it again. According to knowledgeable sources who spoke to the Wall Street Journal, Liberty Global is in advanced negotiations to purchase Cable & Wireless Communications PLC. The sources noted that the value of a deal could top $5 billion, and will expand the cable conglomerate‘s footprint in the Caribbean and the Americas.
It’s even possible that a deal could be finalized before both firms are due to report results in the first week of November, according to one of the sources. That said, it is also still possible that the talks will fall apart before an agreement can be made.
Of note, Cable & Wireless and Liberty Global each released statements confirming the companies are in advanced merger talks after the story broke in the WSJ.
More on possible Cable & Wireless and Liberty Global deal
Keep in mind that Cable King John Malone is the chairman of Liberty’s BoD, and the largest voting shareholder, with a 25% stake as of this spring.
Analysts note a possible deal would be barely a year after Cable & Wireless paid about $1.9 billion in cash and stock for cable firm Columbus International, in which Malone already owned a major stake. That merger gave him a 13% voting stake in Cable & Wireless.
The sources highlight that Malone has therefore recused himself from the negotiations between Liberty Global and Cable & Wireless.
Cable & Wireless had a market cap of close to $4 billion after the close Thursday in London. When you include Cable & Wireless debt, the final price tag for a deal could top $8 billion.
With over six million subscribers, Cable & Wireless provides pay television, Internet, landline phone and wireless service in the Caribbean, Panama, Monaco and the Seychelle Islands (in the northwest Indian Ocean above Madagascar).
This deal is especially attractive to Liberty Global as the firm does not have a mobile operator in the Caribbean.
Liberty Global has been providing cable service in Puerto Rico and Chile for some time, and created a separate stock (LiLAC) earlier this year to track its Lat Am and Caribbean holdings. Although the new stock has dropped since its IPO a few months ago, Liberty Global management have noted the region is ripe for growth. Revenue in the Lat Am region was up a solid 7% for the year as of August, excluding acquisitions and foreign-exchange factors.
