Liberty Global has agreed to buy Caribbean telecommunications company Cable & Wireless Communications for US$5.3 billion.
The board of Cable & Wireless said it concluded that the $8.2 billion deal, including CWC’s debt, was in the long-term best interests of the company, its shareholders, employees and customers, after the operator of Flow in Cayman was approached directly by Liberty over a sale last month.
Under the terms of the deal, Liberty offered $1.32 per CWC share and a 4.5 cent special dividend that would be paid on the closing of the transaction.
This represents a premium of approximately 50 percent on CWC’s share price at the start of the takeover talks on Oct. 21 and an 18 percent premium on the Nov. 13 share price.
Sir Richard Lapthorne, chairman of CWC, said, “While we remain confident that CWC’s unique and highly attractive business has a substantial long-term growth opportunity ahead of it, we believe the recommended offer represents an attractive premium for shareholders and secures earlier delivery of our long-term value potential.”
Liberty Global is the world’s largest international cable television company, with nearly 27 million subscribers and about $18 billion in annual revenue. The company’s operations are mainly based in Europe after a number of acquisitions which included British cable operator Virgin Media and Dutch telecommunications provider Ziggo.
Since further consolidation of the industry in Europe may attract the opposition of regulators, Liberty is focused on growing in other regions.
Liberty Global’s chief executive, Michael T. Fries, said the acquisition would add significant scale and management depth to the company’s operations in Latin America and the Caribbean.
CWC, which after the takeover of Columbus Communications recently rebranded its services in Cayman from LIME to Flow, said the deal would improve the company’s ability to offer products and services to customers in the region and add 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,” CWC said.
Bill McCabe, the chief executive of Flow in Cayman, said the joint entity would combine the complementary skills of both organizations and materially improve the company’s provision of products and service to customers in the region.
For Cayman’s operation specifically, it will be “business as usual” until the deal is complete, he added. “We will continue with our plans to enhance the customer experience and continue to deliver innovative products such as the recently launched Flow TV product.”
Phil Bentley, chief executive of CWC, noted that since the launch of the company’s new strategy two years ago, CWC has transformed itself into a regional operator of broadband Internet, television, telephone and wireless services. The recent acquisition of Columbus accelerated the company’s competitive positioning and Liberty Global will offer scale and “world-class capabilities,” he said.
Liberty Global owner John Malone already has a 13 percent voting stake in CWC as a result of the company’s takeover of Columbus, which was partly owned by Mr. Malone, for $1.9 billion in cash and stock.
The deal is expected to be completed by the second quarter of next year.