Liberty is headed for the Caribbean, where it has made a recommended offer for CWC, which completed its own acquisition of cableco Columbus earlier this year. Shareholders controlling 35.7% of shares have already committed to the offer, meaning approval should be straightforward.
Liberty Global (NYSE:LBTYA) has made a £3.6bn (US$5.48bn) offer to buy the shares of London-listed Caribbean telco Cable & Wireless Communications (LSE:CWC).
Including £1.8bn in debt and a £0.03 per share special cash dividend, the offer values CWC at US$8.2bn, the target stated.
Having been recommended by CWC’s board, the offer must now be approved by shareholders of both companies. Shareholders controlling 45% of CWC have already agreed to do so. These include Liberty Global chairman John Malone, via CHLLC, Columbus International director John Risley via Clearwater, and Columbus CEO Brendan Paddick, who own a combined 35.7% of CWC, which acquired Columbus earlier this year. Orbis Investment Management, which controls another 9.3%, has communicated a non-binding intention to vote in favour.
The deal, subject to approval by antitrust and regulatory authorities, is expected to close in Q2 2016, the companies said in their joint statement.
Liberty will carry out the deal via its tracking stock LiLAC (NASDAQ:LILAK), which it set up a year ago to hold its Latin American and Caribbean assets.
The announcement came three days before the deadline for Liberty to make an offer, having confirmed the talks last month.
Goldman Sachs and Lion Tree advised Liberty Global, while Evercore and JP Morgan Cazenove advised CWC.
Ropes & Gray advised Liberty on financing, and on M&A alongside Shearman & Sterling. Allen & Overy and Latham & Watkins acted as legal advisors (bank and bond, respectively) to Liberty’s financial advisors. Slaughter & May and Paul Weiss, Rifkind, Wharton & Garrison acted as legal advisors (M&A/bank and bond, respectively) to Cable & Wireless.
Based on CWC’s share price on 13 November, the offer is worth £0.81 per share, representing a premium of 40% on the closing price of £0.58 on 21 October, the day before the companies confirmed they were in talks, according to the joint statement. The price includes a £0.03 per share special dividend.
Liberty Global will attribute CWC to the LiLAC Group, which will pro forma be owned by existing LiLAC shareholders (25.44%), existing CWC shareholders (7.21%) and Liberty Global Group (67.35%).
CWC’s main rivals are Digicel, which last month called off a US$2.3bn IPO, Millicom (STO:MIC),
Liberty Global CEO Mike Fries said the acquisition represented a “watershed moment” for LiLAC, which following completion would serve 10 million video, data, voice and mobile subscribers, with leading positions across multiple markets.
“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. 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.”
According to CWC CEO Phil Bentley, his company “has transformed itself into a leading regional quad-play operator through the disposal of Monaco, the creation of our regional hub in Miami and the recent acquisition of Columbus.”
