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John Malone's Liberty expands empire

Monday, January 27 12:50:33

U.S. cable group Liberty Global has clinched a takeover of Ziggo in deal that values the Dutch operator and its debt at 10 billion euros ($13.7 billion) and expands the U.S. firm's European empire.

Ziggo, which in October rejected an offer from Liberty as too low, said on Monday the current cash-and-shares offer implied a price of 34.5 euros per share, a 22 percent premium to Ziggo's shares just before Liberty's initial bid.

Liberty, controlled by U.S. tycoon John Malone, who last year bought a castle in Ireland, has been driving consolidation of the fragmented European cable market as it seeks profit from rising and largely recession-proof demand for faster Internet and digital television.

The company, which gets more than 90 percent of its revenue from Europe, has built its leading position via acquisitions from Ireland to Romania over the past decade and already owns 28.5 percent of Ziggo.

Buying the rest will increase Liberty's presence in the Low Countries, where it owns Ziggo's Dutch competitor UPC, as well as a majority stake in Belgian group Telenet, the main cable group in the north of Belgium.

Combined with UPC, Liberty will reach 7 million people or about 90 percent of Dutch homes, and be a leading challenger to former state monopoly KPN in mobile and for business customers.

Ziggo's shares were down 3.6 percent at 32.05 euros at 1222 GMT, compared with a 3.2 percent decline in the STOXX European telecoms index.

Rabobank analyst Frank Claassen said Ziggo's share price may have reflected too much hope about the impending offer.

"The cash part is fairly low, and the rest is in Liberty Global shares, so there's uncertainty about how the Liberty Global shares are performing," he said, adding that securing regulatory approval would add several months of uncertainty.

Liberty said it expects to find 120 million euros in cost savings from its UPC/Ziggo combination and a further 40 million euros in core profit from revenue growth by 2018.

Diederik Karsten, executive vice president of Liberty Global's European Broadband Operations, said the deal would lead to job cuts because of overlap. It was expected to close in the second half of this year.

Liberty also owns Germany's second-largest cable operator UnityMedia and bought Britain's Virgin Media in a $15.8 billion deal last year.