Liberty Global today announced its offer to buy Cable & Wireless Communications (CWC) in a deal valued at approximately £3.5 billion or $5.3 billion.
The consideration of 81.04 pence per CWC share represents a purchase price multiple of 10.7x CWC’s adjusted LTM September 30, 2015 EBITDA.
“The acquisition of Cable & Wireless represents a watershed moment for our recently created LiLAC platform. It will add significant scale and management depth to our fast-growing operations in Latin America and the Caribbean, while creating a new regional consumer and B2B powerhouse,” said Mike Fries, CEO of Liberty Global.
The combined business will serve 10 million video, data, voice and mobile subscribers, with leading positions across multiple markets in Latin America and the Caribbean.
Liberty Global has 27 million customers subscribing to 57 million television, broadband internet and telephony services at September 30, 2015.
This new combination would have generated estimated consolidated revenue of over $3.5 billion and estimated consolidated OCF of $1.4 billion for the twelve months ended September 30, 2015. The combined business is expected to deliver low double-digit rebased OCF growth over the medium term.
Liberty Global believes that the combined businesses of LiLAC and CWC will be exploiting the fragmented telecom and pay television landscape. Liberty Global expects to generate synergies as a result of the integration of CWC and the LiLAC Group businesses.
Savings
Ongoing integration between CWC and Columbus is expected to generate $125 million of run-rate cost savings and $145 million of one-time capital expenditure synergies by March 31, 2018. CWC says there will be revenue synergies through cross-selling, improvements in the video offering and network quality, and enhancements in the B2B offering.
The acquisition of CWC will enable Liberty to save from elimination of public company expenses, corporate and administrative rationalization, leveraging the combined scale in areas such as content, procurement, and product development. Capitalizing on CWC’s terrestrial and submarine network assets and B2B product portfolio will benefit LiLAC Group’s operations.
