Liberty Global confirmed perhaps the worst kept secret in international cable, agreeing to sell its cable businesses in Germany, the Czech Republic, Hungary and Romania to wireless giant Vodafone in a deal valued at about $22.7 billion.
Liberty and Vodafone had been in talks about a deal since February. On Tuesday, The Financial Times reported the two were close to a deal.
After the transaction is completed, Liberty Global will continue to have European cable operations in the United Kingdom, Ireland, Belgium, Switzerland, Poland and Slovakia, reaching 24 million homes and 26 million video, broadband and fixed-line telephony subscribers and 6 million mobile services. In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million fixedline and 5 million mobile services.
“We have a rich history at Liberty Global of successfully developing and reshaping our business to drive innovation, advance customer services and create significant value for shareholders,” Liberty Global CEO Mike Fries said in a statement. “This is one of those moments.”
The deal values the Liberty Global assets at a double-digit cash flow multiple and will pump $12.7 billion in cash into the Denver-based company.
For Vodafone, which already owns Kabel Deutschland in Germany and Ono in Spain, the deal solidifies its standing as one of the leading wireline and wireless providers in Europe.
The deal, which is expected to attract intense scrutiny from European regulators, is anticipated to close in mid-2019.
“This transaction will create the first truly converged
pan-European champion of competition. It represents a step change in Europe’s transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders,” Vodafone Group chief executive Vittorio Colao said in a statement. “We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone’s track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators. Vodafone will become Europe’s leading next generation network owner, serving the largest number of mobile customers and households across the EU.”
LionTree and Goldman Sachs are acting as financial advisers to Liberty Global on the transaction. Morgan Stanley, Robey Warshaw and UBS are acting as financial advisers to Vodafone, and Slaughter and May is acting as legal adviser to Vodafone.
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