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Liberty to buy Virgin Media for $23bn

US cable giant Liberty Global has agreed to acquire the UK’s Virgin Media for US$23.3bn.

The deal, which was mooted yesterday, will be for a mixture of cash and shares and will see Liberty take control of the UK’s second largest pay-TV operator after satcaster BSkyB.

It pits Liberty chairman John Malone against his old rival Rupert Murdoch, whose News Corp controls 39.1% of Sky. Virgin Media has 4.9 million total customers whereas Sky has 10.7 million.

“Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we’ve been successfully using for over seven years,” Mike Fries, President and CEO of Liberty Global.

“Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market.”

He said that following the deal, which remains subject to shareholder and regulatory approval, roughly 80% of Liberty Global’s revenue will come from five countries – the UK, Germany, Belgium, Switzerland and the Netherlands.

“Over the past six years, Virgin Media has transformed the digital experience of millions of customers, catalyzed a deep-rooted change in the UK’s digital landscape and delivered impressive growth and returns for our shareholders,” added Virgin Media CEO Neil Berkett.

“I’m confident that this deal will help us to build on this legacy. Virgin Media and Liberty Global have a shared ambition, focus on operational excellence and commitment to driving shareholder value. The combined company will be able to grow faster and deliver enhanced returns by capitalizing on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.”

The deal was announced as Virgin Media reported a 30% increase in annual operating profit to £699.1m and Liberty Global reported a 9% rise in operating income to US$1.98bn.

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