NEW YORK (The Deal) -- Acquisitive cable company Liberty Global (LBTYA - Get Report) on Monday, Jan. 27, announced an agreement to buy the outstanding shares in Dutch cable company Ziggo in a deal with an enterprise value of 10 billion euros ($13.7 billion).
Liberty, of Englewood, Colo., said it would offer Class A and Class C shares, as well as 11 per share in cash, to buy the 71.5% of the Dutch cable company it doesn't already own. The bid is worth 34.53 euros per Ziggo share, a 4% premium to the company's Friday close and 12% higher than Ziggo's close on Dec. 11, the day before it revealed the latest round of talks.
It values the target's total equity at 6.9 billion euros.
"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," said Liberty CEO Mike Fries in a statement.Ziggo and Liberty reopened talks in December after earlier negotiations led to a stalemate over price. Like rivals, Liberty is spending to expand its geographic reach and win new customers to sell Internet, phone and entertainment services -- it already runs the UPC Holding cable company in the Netherlands. The deal will mean a pink slip for new Ziggo CEO Rene Obermann, who left the leading role at Deutsche Telekom to take up the helm at Ziggo on Jan. 1. He will step down once the deal closes in the second half. Ziggo's Utrecht headquarters will become Liberty's Dutch base. Both Ziggo boards are recommending the offer to shareholders. Ziggo shares slipped 3.4%, or 1.12 euros, to trade at 32.12 by early afternoon in Amsterdam as investors uninterested in owning Liberty's U.S.-listed shares bailed. The shares have gained about 48% in the last year, in large part because of takeover speculation. Liberty, whose chairman is cable financier John Malone, first showed its interest in Ziggo by buying 28.5% last year after it was listed by previous owners Warburg Pincus LLC and Cinven Ltd. Last year Liberty spent $23.3 billion buying the U.K.'s Virgin Media and 3.16 billion euros on German regional cable operator Kabel BW. Despite the spending, Liberty Monday said it would also extend a share buyback by $1 billion. It's already pledged to spend $3.5 billion repurchasing its stock -- part of a total $10 billion since 2005, according to Liberty. Liberty took financial advice from Bank of America Merrill Lynch and Morgan Stanley, with Allen & Overy LLP handling legal details. Ziggo took financial advice from JPMorgan Chase & Co. and Perella Weinberg Partners LP's Philip Yates. Freshfields Bruckhaus Deringer LLP provided counsel. ABN Amro Group NV and attorneys from Stibbe acted as advisers to Ziggo's supervisory board.