Liberty Global snaps up Cable & Wireless in £3.5bn deal

Liberty Global, the cable empire owned by John Malone, has announced a £3.5bn deal to buy Cable and Wireless Communications (CWC), extending the reach of the US “king of cable” in Latin America and the Caribbean.

Liberty, which owns Virgin Media, has tabled a cash and shares deal to buy the London-listed Caribbean telecoms operator, which has been recommended by the CWC board, reports The Telegraph.

The deal values CWC at 81.04p a share, including a 3p special dividend if it is approved. The offer represents a 40pc premium on CWC’s closing price of 58p per share on October 21, the day before CWC admitted it had been approached by Liberty.

As a result of CWC’s varied shareholder register – which includes tens of thousands of small British shareholders – the offer is being made in a number of complex formats to appease large investors and gain support.

Mr Malone already owns around 13pc of CWC after the FTSE 250 company bought Columbus, a Bahamas-based fibre-based telecoms provider, for $1.85bn last year.

At the time, that deal was valued at around nine or ten times ebitda – earnings before interest, tax, depreciation and amortisation – and was deemed by analysts to be a hefty price.

But this offer values CWC at 12.3 times ebitda.

The deal will mean the departure of one of the UK’s oldest companies from the stock market. CWC can trace its roots back to the 1860s after Manchester cotton merchant Sir John Pender laid the first successful telegraph cable under the Atlantic Ocean.

The old Cable & Wireless was split in two in 2010 following struggles with debt. Its UK network and international submarine cables were sold to Vodafone, while mobile and fixed line operations dotted around the world became CWC.

Mike Fries, the boss of Liberty Global, described the deal as a “watershed moment” for the company, which is expanding in Latin America and the Caribbean.

“Upon completion, the combined business will serve 10m video, data, voice and mobile subscribers, with leading positions across multiple markets,” he said.

Phil Bentley, the former managing director of British Gas, has run CWC since January 2014. The offer price is more than double the company’s share price when he took over from predecessor Tony Rice.

Ownership of CWC will allow Liberty to combine the business with its Latin American assets to create a larger operation to mount a stronger challenge in the region’s telecoms industry to Spain’s Telefonica and Mexico’s Carlos Slim. It will shift Liberty’s balance westward slightly, although most of its networks are in Europe, including Virgin Media.

CWC moved its managament headquarters to Miami from London last year, after a series of asset disposals in far-away territories such as Macau and Monaco, allowing it to focus on the Caribbean.