Liberty Global Plc (LBTYA) Pursues Ziggo Again

Liberty Global plc. (LBTYA), a leading cable TV operator in Europe and Latin America, is set to fortify its foothold in the core North European markets. The company is again negotiating to acquire full control of Ziggo N.V., the largest cable MSO (multi service operator) in Netherlands. In Oct 2012, Liberty Global’s first attempt to acquire Ziggo entirely was promptly rejected by the latter as the financial term was inadequate.

At present, Liberty Global holds a 28.5% stake in Ziggo. The financial terms on which the two entities are currently negotiating for the remaining 71.5% stake of Ziggo are yet to be disclosed. However, several industry researchers have estimated that the company may need to pay $6.8 – $7 billion more. 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. The company currently holds a 58.4% stake in the Belgian cable TV operator Telenet Group Holding NV.

A merger between Liberty Global and Ziggo will create a cable TV giant in Netherlands with approximately 10.8 million revenue generating units. Ziggo also competes with telecom operators such as, Royal KPN N.V. and Vodafone Group plc. (VOD).

In Jun 2013, Liberty Global acquired a 100% stake in the British cable MSO Virgin Media. Together, Liberty Global and Virgin Media had approximately 24.5 million subscribers at the end of third-quarter 2013.

In the U.K., the merged entity poses serious competitive threat to British Sky Broadcasting Group plc and BT Group plc. (BT). British Sky Broadcasting Group is the largest pay-TV operator in the U.K. and is partially controlled by News Corp. (NWSA). Currently, Liberty Global has a Zacks Rank #3 (Hold).