Updated from 9:42 a.m. EST

United Pan-Europe Communications

, a Dutch cable television operator, has agreed to acquire

SBS Broadcasting

(SBTV)

, a Luxembourg-based television and radio broadcaster, for about $2.8 billion in stock and cash.

In midday Wednesday trading, shares of Amsterdam-based UPC were down 11, or 5%, to 226, while shares of SBS were up 17, or 30%, to 74. On the Amsterdam stock exchange, UPC closed at 234.65 euros, down 15.3 euros, or 6%, and SBS was at 79 euros, up 19, or 32%.

SBS and UPC will combine SBS' broadcasting operations in Western and Central Europe with UPC's broadband network in Europe and Israel.

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UPC already holds a 23% stake in SBS. With this deal, UPC will own 27.6% of SBS' outstanding common stock or 40.9% of the common stock on a fully diluted basis.

The deal values SBS at about $85.14 a share, based on UPC's current closing share price on Wednesday of 237. Under the terms of the agreement, UPC will pay $40 per share of SBS in cash as well as 0.19048 share of UPC ordinary shares A for each share of SBS.

The transaction, which is fully supported by the UPC and SBS boards, is subject to a collar mechanism, which means that SBS shareholders will receive at least $77.50 and at most $86.00 for each SBS share based on UPC's average closing share price in the trading days before the offer.

The exchange offer will take place in the third quarter.

Harry Evans Sloan, the chairman and chief executive of SBS, has been nominated to join the UPC supervisory board.

UPC was advised by

Goldman Sachs International

while SBS was advised by

Donaldson Lufkin & Jenrette

.