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Liberty to Launch Ziggo Offer as EC Review Continues

NEW YORK (The Deal) -- After a six-month hiatus, Liberty Global (LBTYA - Get Report) said Friday it would launch its contentious 4.9 billion euros ($6.7 billion) offer for the 71.5% of Dutch rival Ziggo it doesn't already own in July as the European Commission takes a tough look at the deal's impact on competition in the Benelux countries.

Englewood, Colo.-based Liberty said Ziggo shareholders can tender their stock into the offer from July 2 to Sept. 10 with plans to delist the target should it succeed. Baptiest Coopmans, the CEO of Liberty's Dutch operations, would retain his position in the enlarged group with Ziggo CEO Rene Obermann leaving after less than a year with the company. Obermann quit as CEO of Deutsche Telekom AG to take up the helm at Ziggo on Jan. 1.

The two sides agreed on the offer on Jan. 27 and since then have been holding talks with Ziggo's Works Council.

The takeover still needs the approval of the European Commission. This week, the EC refused to allow Dutch competition authorities to rule on the deal and competition authorities have expressed concern the merger would stifle competition in the Netherlands since it gives Liberty about 90% of the cable market.

However, Liberty and other cable groups have argued that their market also includes telephone companies and sometimes even broadcasters. They also say it's becoming increasingly international.

The EC has until Oct. 17 to rule and its investigation can be extended. Brussels regulators opened a Phase II, in-depth review on May 8.

Liberty said it needs the approval plus 95% of Ziggo's shares for the deal to be ruled a success. Ziggo shareholders will vote on various resolutions related to the offer at a Aug. 26 meeting.

Liberty is offering 0.2282 of a Class A and 0.5630 of a Class C share, as well as 11 euros per share in cash, to buy the majority of the Dutch cable company it doesn't own. The bid is worth about 35.26 euros per Ziggo share, a 4.9% bonus to the stock's Thursday close. The offer values Ziggo's total equity at 6.9 billion euros and gives Ziggo an enterprise value of 10 billion euros.

Liberty says the deal offers Ziggo shareholders a 47% bonus over the target's share price on March 27, 2013, the day before Liberty first bought into Ziggo.

Ziggo shares slipped 0.07 euros in Amsterdam to 33.55 euros.

Liberty is taking financial advice from Bank of America Merrill Lynch and Morgan Stanley, with an Allen & Overy LLP team led by Annelies van der Pauw and including Paul Glazener handling legal details. Ziggo is taking financial advice from JPMorgan Chase & Co. and Perella Weinberg Partners LP's Philip Yates. A Freshfields Bruckhaus Deringer LLP team including Willem van der Staay, Hanneke Rothbarth, Robert ten Have, Winfred Knibbeler, Bas Mees and Elske Raedts is providing counsel. A Shearman & Sterling LLP team including Peter Haye, James Duncan, Gabrielle Wong, Apostolos Gkoutzinis and Kristen Garry advised Ziggo on a 4 billion euro debt restructuring in connection with the takeover.

ABN Amro Group NV and attorneys from Stibbe are acting as advisers to Ziggo's supervisory board.

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