Liberty Global spends big on Telenet

Deal Handshake

Liberty Global has taken a sizeable step forward in its quest to take full ownership of Belgium’s Telenet, but its acquisition of the shares it doesn’t already own has come at a cost.

The operator group this week shared details of the outcome of the takeover bid it announced back in March, the headline result being that it now holds 93.23% of Telenet. Previously its stake, including shares held by Telenet itself, stood at just over 62%.

The initial acceptance period of its voluntary and conditional public takeover offer, which drew to a close on 12 July, saw Liberty Global pick up just under 34.7 million shares. Given that this was a €22-per-share offer, that’s a total bill of €763 million. Not small change, by any stretch of the imagination.

The firm will actually shell out €21 per share on the payment date, later this month, factoring in the deduction of a €1-per-share gross dividend announced in April and paid in May, but the financial impact is the same.

And Liberty Global is prepared to part with more euros for the remaining shares.

Under market rules, because Liberty Global and Telenet have together exceed a 90% ownership threshold, the tender offer will re-open to enable more shareholders to sell out, should they so desire. This subsequent offer period will run from 24 August to 13 September.

“The reopening gives investors who missed the initial acceptance period or those seeking additional liquidity the opportunity to still accept the offer,” Liberty Global said. Clearly it believes that the hold-outs are not doing so wilfully, or at least that’s the impression it seeks to convey.

Ultimately, they may not have a choice. If, following the new offer period, Liberty Global and Telenet hold 95% or more of Telenet’s shares and more than 90% of the shares covered by the offer then a squeeze-out will follow; those still holding Telenet shares will have to surrender them to Liberty Global under the same financial conditions.

Essentially, if Liberty Global is correct in surmising that some shareholders missed the first offer period or have potentially had a change in circumstances, then it will find itself with 100% ownership of Telenet in the near future. And that is good news for a company that has been shooting for just that aim for the past decade; it made its first attempt – largely unsuccessful – to buy out minorities as long ago as January 2013.

This is a crucial time for Telenet, given the recent changes in the Belgian telecoms market. Orange’s acquisition of VOO raised competition concerns at EU level, but Brussels identified Telenet, a growing fixed and mobile player, as the answer to those worries. It brokered a network-sharing deal with Orange, which will help to boost its fixed-line presence, and is already a major player in mobile, as the owner of operator Base.

There is a growth opportunity here, which is doubtless why Liberty Global is so keen to spend big on buying up Telenet’s shares.

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