London – Cable & Wireless Communications released on Thursday the announcement that it was in takeover discussions with Liberty Global, the European cable and wireless operator controlled by John Malone.
The takeover deal could be valued at more than $5 billion and would allow Liberty Global to expand its reach in the Caribbean where they still don’t have the company’s mobile phone presence. It contemplates a combination of cash and shares. Malone has spent the last years advocated to consolidate the cable industry in Europe and has already a growing presence in Latin America.
“He’s going to create another oligopoly in Latin America, after doing this in the U.S. and then in Europe,” said Neil Campling, a media analyst at Aviate Global in London as reported by Bloomberg.
Cable & Wireless is already owned by Malone in a 13% stake worth 2.6 billion pounds or about $4 billion until Thursday, but details of the new acquisition have not been revealed by the company or Malone.
“There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made,” Cable & Wireless Communications said in a news release on Thursday.
After the media reported the presumed takeover bid by Liberty Global, Cable & Wireless shares rose more than 20% in London. The company specializes in providing pay television, broadband, mobile and traditional land-line telephone services in the Caribbean, Monaco, Panama, and the Seychelles.
The businessman is the one responsible for spending more than $51 billion consolidating cable operations in the European continent, as the plunge in interest rates allowed Liberty Global to borrow cheaply. Liberty Global shares (with Vodafone now potentially out of the picture) hit 13% lower on Thursday, and analysts predict he will focus on content assets in Europe, such as U.K. television broadcaster and producer ITV Plc.
“There are a few dominant players there in Latin America; it’s high-growth […] Certainly they could add a lot of operational expertise. So it seems like it would be a good time for him to consolidate it,” said Amy Yong, a media analyst at Macquarie Capital in New York.
Source: New York Times