Liberty Global ended months of speculation, agreeing to purchase the remaining interest in Dutch cable operator Ziggo in a cash and stock deal valued at about $13.7 billion.
Liberty will combine its existing Dutch operations – UPC Netherlands – with Ziggo, reaching a combined 7 million homes, with about 4 million unique customers. The deal is expected to close in the second half of this year.
As part of the agreement, which values the Dutch cabler at about 34.53 euros per share ($47.18), Ziggo shareholders will receive 11 euros ($15.03) in cash and the rest in Liberty Global stock.
“This transaction creates a nationwide cable champion that will drive investment and innovation for the benefit of Dutch consumers and businesses alike, said Liberty Global CEO Mike Fries in a statement. “Our combined operations will reach over 90% of all Dutch households allowing us to compete more effectively with the other national telecommunications and satellite platforms in the Netherlands, and at the same time generate significant revenue and operating efficiencies.”
Liberty estimates the deal will bring about 160 million euros in annual run-rate synergies by 2018. The price represents a multiple of 9.3 times Ziggo’s estimated 2014 cash flow.
“For Ziggo this is a great opportunity to create a Dutch industry leader together with UPC Netherlands,” Ziggo supervisory board chairman Andrew Sukawaty said in a statement. “In essence, this transaction is about two Dutch companies coming together. Our customers will benefit as the new combination has an agenda of investing in growth and innovative solutions, helping customers to enjoy media and entertainment even more while at the same time ensuring a high level of data-security and privacy.”
Bank of America Merrill Lynch and Morgan Stanley served as Liberty Global’s financial advisors in the transaction, while J.P. Morgan and Perella Weinberg Partners served in that function for Ziggo. Legal advisors were Allen & Overy for Liberty Global and Freshfields Bruckhaus Deringer for Ziggo.