International cable giant Liberty Global Inc. said Tuesday it has agreed to acquire Virgin Media Inc. in a deal valued at $23.3 billion, including debt, that would expand its presence in the United Kingdom and create a rival to British Sky Broadcasting (BSkyB) in Europe's pay-television market.
Englewood, Colorado–based Liberty, which is headed by billionaire cable pioneer John Malone, will pay roughly $15.75 million in stock and cash for Virgin Media, with the balance of the purchase price in the form of assumed debt. Under the terms of the agreement, Virgin Media shareholders are to receive a total of $47.87 in cash and stock for each of the company's shares—a 24 percent premium over Virgin Media's Monday closing price.
Virgin Media—which has headquarters in New York and Hook, England—was the first U.K. company to bundle broadband, television, mobile phone, and home phone services for customers. The company provides broadband connections to more than half of the U.K.'s homes and has roughly 4.9 million customers overall, compared to the 10.7 million customers served by BSkyB, according to Reuters.
Reuters also reports that Liberty and Virgin Media both maintain that the agreement is aimed at allowing the former to expand in Europe, rather than to square off against BSkyB for control of the European pay-television market.
Nonetheless, acquiring Virgin Media's complementary services and broad coverage area would position Liberty—which has been actively expanding overseas in recent years—as a global media behemoth serving 25 million customers across 14 countries. In 2011, Liberty paid $5 billion to acquire Germany's third-largest cable operator, Kabel Baden-Württemberg on the heels of picking up that country's second-largest cable company, Unitymedia, for $5.2 billion in 2010. In a separate 2011 deal, Liberty acquired Polish cable company Aster for $805 million. Liberty also recently increased its stake in Belgian cable company Telenet Group Holding from about 50 percent to 58.4 percent after making an unsuccessful $2.6 billion bid to acquire the remainder of the company last September.
Once the Virgin Media deal closes, Liberty Global CEO Mike Fries (Malone is the company's chairman) said in a statement announcing the deal, about 80 percent of Liberty's revenue would come from Belgium, Germany, the Netherlands, Switzerland, and the U.K. The deal is expected to close in the second quarter of this year, pending approval from regulators and the shareholders of both companies.
Lawyers at both Shearman & Sterling and Ropes & Gray are advising Liberty on the Virgin Media acquisition. Shearman's team includes M&A partners George Casey, Eliza Swann, and Jeremy Kutner. Litigation partner Alan Goudiss, tax partner Laurence Bambino, and executive compensation and employee benefits partner Doreen Lilienfeld are also advising.
Ropes, meanwhile, is fielding a London-based team led by finance partner W. Jane Rogers. Finance partners Maurice Allen, Mike Goetz, and Matthew Cox are also advising, as are corporate partner Kiran Sharma and tax partner John Baldry.
As The Am Law Daily has reported in the past, Ropes worked with Freshfields Bruckhaus Deringer on Liberty's deals in 2010 and 2011 involving German cable providers. Both Allen and Goetz are former Freshfields partners who left that firm to open Ropes's London office in 2009.
Latham & Watkins also landed a role on the deal representing Credit Suisse in its role as a financial adviser to Liberty. Latham corporate partners Mark Gerstein and Bradley Faris worked on the matter, along with tax partner Nicholas DeNovio.
For its part, Virgin Media has turned to Fried, Frank, Harris, Shriver & Jacobson and Milbank, Tweed, Hadley & McCloy for outside counsel on the transaction. London-based securities partner Timothy Peterson is leading Milbank's team. (Peterson joined Milbank from Fried Frank's London office in 2011, according to U.K. legal publication The Lawyer.)
Fried Frank's team includes corporate partners Richard May, Robert Mollen, and John Sorkin. Tax partners Robert Gaut and Richard Wolfe are also advising, as is corporate senior counsel Arthur Fleischer Jr.
Fried Frank advised cable company NTL in 2006 on its purchase of mobile phone network Virgin Mobile, which created the company later rebranded as Virgin Media. The firm then represented Virgin Media in 2011 in connection with its sale of a 50 percent stake in the UKTV joint venture to Scripps Networks Interactive Inc. for almost $530 million.
Virgin Media has been without a general counsel since Scott Dresser left the job last August, though The Lawyer reports that Fried Frank's Mollen served as the company's acting general counsel in connection with the sale to Liberty. Another former Virgin Media general counsel, Bryan Hall, relinquished that role in January 2011. A former Fried Frank partner, Hall currently serves as general counsel of Liberty Global, a position he was appointed to in December 2011.
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Quartet of Am Law 100 Firms Advise on $23 Billion Liberty Global-Virgin Deal
The Am Law Daily
February 6, 2013
