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Liberty Global To Acquire Ziggo

Liberty Global, a U.S. cable group, has clinched a takeover of Ziggo NV (AMS:ZIGGO), in a cash-and-stock deal valuing Ziggo at about 10 billion euros, or about $13.7 billion.

The deal is set to cement Liberty’s dominance in Europe’s cable industry.

Liberty Global’s long-running pursuit

As reported earlier, Ziggo NV (AMS:ZIGGO) previously rejected a bid from John Malone’s Liberty Global, calling it ‘inadequate’ and saying that they aren’t sure if another, higher bid will be forthcoming.

Liberty Global, which owns 28.5% of Ziggo NV, bought Virgin Media Inc. (NASDAQ:VMED) earlier last year for $16 billion and made an offer on Kabel Deutschland Holding AG (FRA:KD8) (ETR:KD8) though it was outbid by Vodafone Group Plc (NASDAQ:VOD) (LON:VOD). Most people considered the Ziggo bid as part of a larger strategy to expand into European markets.

Liberty Global initially bought a 12.7% stake from Barclays PLC (NYSE:BCS) (LON:BARC) in May and then increased its holdings in July. Liberty Global already has a presence in The Netherlands through UPC Broadband Holding BV.

However, last month Liberty Global again pursued the proposal by negotiating to acquire full control of Ziggo NV (AMS:ZIGGO).  Liberty Global has been 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 (EBR:TNET).

Cash-Share deal

The cash-and-shares offer announced Monday implied a price of 34.5 euros per share, a 22% premium to Ziggo’s shares just before Liberty’s initial bid.  According to the offer, Liberty will pay a stock dividend of one class C share for each existing class A, B or C shares in early March. Upon completion of this, Ziggo NV (AMS:ZIGGO) shareholders will receive 11 euros in cash, 0.2282 Liberty class A shares and 0.5630 class C stock for each Ziggo share that they hold. The offer represents a premium to Friday’s close of 33.25 euros.

The deal will combine Liberty Global’s existing Dutch operations, UPC Netherlands, with Ziggo’s business, creating a combined company with €2.5 billion in annual revenue. UPC Netherlands is the second-largest cable provider in the Netherlands.

Ziggo NV (AMS:ZIGGO) has agreed not to solicit other offers, but the deal could be terminated if a more beneficial offer with a higher price is made in the next eight weeks. Liberty Global has the right to match any offer.