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Liberty Global Buys Minority Stake in Ziggo

Liberty Global, the international cable operator headed by chairman John Malone, said Thursday that it has acquired a 12.65% interest in Dutch cable company Ziggo for about $810 million.

The deal is the second big cable deal for Liberty Global in about a month – in February it agreed to buy British cable operator Virgin Media for about $16 billion.

Liberty said in a statement that it is buying 25.3 million shares in Ziggo from Barclays Capital Securities at about $32 per share.

Liberty already has a strong presence in the Netherlands – its UPC Netherlands subsidiary has about 1.7 million video subscribers. Ziggo, the largest cable operator in the Netherlands with about 3.1 million subscribers, had been a potential target of Liberty Global back in 2011, but the company decided to conduct an initial public offering instead. That March 2012 IPO raised about $1.1 billion,  but in recent months two of its backers – Warburg Pincus and Cinven, had been looking to sell their 20% stake in the company. Barclays took the stake last week after it couldn’t find a buyer on behalf of Warburg and Cinven, according to reports.

In a research note, ISI Group media analysts Vijay Jayant and David Joyce wrote that the deal will likely fend off any other potential suitors for Ziggo – Vodafone had been reportedly interested in the Dutch cabler – but added that Liberty probably wouldn’t make a move for full control for at least 18 months.

“We view [Liberty Global] as the logical, ultimate acquirer of Ziggo, but at the right price,” the analysts wrote.

In a statement, Liberty Global said the minority investment is “an attractive opportunity to make a strategic investment in a market where it already enjoys a sizeable presence.” The company said it also is financially attractive given Ziggo’s high dividend yield (7.4%) and the expectation the Dutch cabler will p[ay out about $475 million in dividends this year.