UnitedGlobalCom Inc. said it will initiate a tender offer for the remaining shares it doesn’t already own of UGC Europe Inc. at a 9.8% premium to UGC Europe’s Oct. 3 closing price.
UGC Europe was created earlier this year after Dutch cable operator United Pan-Europe Communications N.V. emerged from Chapter 11 bankruptcy protection. UGC currently owns about 66.8% of UGC Europe’s outstanding stock.
In a press release Monday, UGC said UGC Europe shareholders would receive nine shares of UGC class-A common stock for every share of UGC Europe they own. According to the NASDAQ Web site (www.nasdaq.com), UGC Europe has about 50 million shares outstanding.
UGC closed at $6.56 per share Friday and UGC Europe closed at $53.79. The 9.8% premium assumes a value of $59.04 per UGC Europe share.
The majority of UGC Europe shareholders are former bondholders who accepted equity in the restructuring and are likely to tender their shares in return for the more liquid UGC stock, Stifel Nicolaus & Co. Inc. cable analyst Ted Henderson said in a research report.
He added that Liberty Media Corp. -- which owns 75% of UGC -- could use the combined UGC Europe and UGC as an acquisition vehicle for other international cable assets. UGC currently has about 7.4 million video subscribers in several countries outside of the United States.
Investors appeared pleased with the deal, driving UGC Europe’s stock more than 5% ($2.78 per share) to $56.57 each Monday. UGC stock fell 33 cents (just over 5%) to $6.23.