Having announced late last month that it was contemplating the purchase of Cable & Wireless Communications Plc (CWC), Liberty Global (NASDAQ: LBTYA, LBTYB, LBTYK, LILA and LILAK) has decided to close the deal. CWC announced that it had agreed to Liberty's all-stock approach, which would value the Caribbean communications services company at approximately $8.2 billion (including approximately $2.7 billion in debt) in CWC's estimation.
Liberty says it has offered stock worth approximately £3.5 billion ($5.3 billion), or an implied price of 78.04 pence per CWC share, based on closing share prices as of November 13, 2015. CWC shareholders also would be entitled to receive a special dividend of 3.00 pence per share at the closing of the transaction, which would be in lieu of any previously announced CWC dividend.
Liberty plans to combine CWC with its existing Latin American and Caribbean Group (LiLAC) operations. LiLAC includes VTR in Chile and Liberty Cablevision of Puerto Rico.
"By joining forces at this time, we combine our high growth assets in Latin America and the Caribbean, with the scale and complementary skills of a truly world class global player, materially improving our ability to offer leading products and services to customers in the region we serve," stated CWC in a press release. "And by adding their strength and 1.5 million customers in Puerto Rico and Chile, backed by our strengths in adjoining markets and in leading submarine and terrestrial fiber networks, together we expect to grow our Consumer and B2B offers even faster."
"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," added Mike Fries, CEO of Liberty Global. "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."
CWC hopes to hold shareholder meetings to approve the deal at the end of the first quarter or beginning of the second quarter of 2016, with completion of the deal following quickly. Liberty also has said they expect a second quarter 2016 close.
If and when the deal consummates, Liberty will face the task of integrating a company that itself is in the midst of an acquistion integration. CWC acquired submarine network operator Columbus International in March of this year. CWC had stated its expects $125 million of run-rate cost savings and $145 million of one-time capital expenditure synergies by March 31, 2018, from that deal. Liberty says estimation of the synergies from acquiring CWC awaits the completion of a quantified financial benefits statement as required under UK law.
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