Liberty Global (LGI), the Denver-based international MSO headed by Liberty Media chairman John Malone, has agreed to sell its 37.8% stake in Japanese cable operator Jupiter Telecommunications to KDDI for $4 billion.
KDDI, the second largest wireless operator in Japan, already has about 900,000 cable customers in Japan, about one-third of J:Com's subscriber base.
Japanese finance giant Sumitomo Corp., which owns a majority interest in J:Com, will continue that role.
The deal, which is expected to close on Feb. 10, comes on the heels of LGI's $5.2 billion purchase of Unitymedia GmbH, the second largest cable operator in Germany. LGI said in a statement that the sale of J:Com will allow it to concentrate fully on its European operations.
"Our investment in J:Com and our partnership with Sumitomo over the last 15 years have both been extremely successful and gratifying," LGI CEO Mike Fries said in a statement. "Exiting the Japanese market at a substantial premium allows us to redirect our capital into more strategic consolidation opportunities in our core markets as well as our ongoing stock buyback initiatives."
The move comes as a slight surprise - LGI's partnership with Sumitomo Corp. for J:Com was set to expire in February, although some analysts expected the company to try to gain a larger stake of the Japanese cabler. Instead, LGI will sell for cash its subsidiaries that directly or indirectly hold its interest in J:Com, including those which collectively own its interest in LGI / Sumisho Super Media LP.
In addition, LGI will retain the right to receive the anticipated final 2009 dividend of 490 yen ($5.44) per share attributable to its interest in J:Com that is expected to be approved at the March 2010 J:Com shareholders meeting.
The transaction implies a price of 140,000 yen ($1,555.23) for each of LGI's 2.6 million J:Com shares, or a 65% premium to their price on Jan. 22. New York investment banker J.P. Morgan is advising LGI on the transaction.
In a research note, Miler Tabak media analyst David Joyce wrote that more deals could be on the horizon for LGI - particularly for Austar, its Australian MSO - as it focuses its efforts on Europe.
"We expect the company will redeploy capital into Europe, where it already has 85% of its footprint now," Joyce wrote.
Investors appeared pleased with the deal as LGI shares rose more than 6% ($1.45 each) in early trading Monday to $24.99 per share.
Liberty Global has about 17 million, video, voice and data customers in 14 countries.